that it reduced productivity, lowered the return on new investment, drove companies offshore and artificially elevated local prices99. A more flexible economy in which competition is truly open will increase productivity and create new business opportunities and ultimately growth as evidenced in multiple cases cited above. In Australia for example, the National Productivity Commission (2005), observed productivity and price changes in the selected infrastructure services due to governmental interventions to promote competition boosted Australia’s GDP by 2.5 per cent100. On the contrary, Hasken and Sadun (2012) examined the effects of an increase in regulation, highlighting that increased regulation that hindered effective fair competition of retailing in the UK from 1996 reduced productivity growth by about 0.4% p.a101. Similarly, Cincera and Galgau (2005) postulated that tighter regulation that reduced entry in European markets raised mark-ups and lowered labour productivity growth102. In summary, key highlights of these cases and affirmations are: • …show more content…
Nalebuff, B. J. & Stiglitz, J. E. (1983), ‘Information, Competition and Markets,’The American Economic Review, Papers and Proceedings, Vol. 73(2).] Should other industries be as competitive as the telecom sector, the new derived performance oriented entry of efficient firms and exit of non efficient firms would increase the general productivity of the economy, In this way, the entry and exit of efficient and inefficient firms are deemed significant contributors to increased productivity and to economic growth104. Dynamic efficiency through innovative channels. Competition compels firms to innovate and create new products and services to increase profits and gain market share. Thus, competition leads to technological progress through an innovative channel. Innovation spurred by competition provides firms faced with effective competition the tool and opportunity to escape competition and/or compete