Article content
At a time of significant rise in food prices and overall increase in the cost-of-living concerns about the role of competition in the economy have become louder and louder.
Article content
Often we hear the proposition that capitalism encourages competition and the Canadian economy essentially being capitalistic possesses the framework to encourage competition. This reasoning is a fallacy.
Article content
The Canadian economy is largely oligopolistic where few firms control large chunks of the economy. Segments of the economy including food business, banking and insurance, telecommunications and energy are all oligopolies and contending that there is room for competition in these sectors is utter nonsense.
Economic theory tells us that there should be a number of units for effective competition to exist. Further, to have a viable competitive regime, no firms should enjoy market dominance to influence prices.
Article content
To refine the model, the Canadian economy is a classic example of monopolistic competition where few firms sell basically identical products with slight differentiations.
As the Canadian economy evolved over the years, competition has been supplanted and the monopolistic model has become deeply entrenched. The big companies harping that they promote competition is a clever ploy to fool the consumers.
Joe Jeerakathil, Saskatoon