Table Of ContentCOMPETITION INEUROPE
HENKDEJONG
PhotographbyWerryCrone,PhotoTrouw.
WithkindpermissionofPerscombinatieAmsterdam.
Competition in Europe
Essays in Honour of Henk W. de Jong
edited by
Peter de Wolf
Erasmus University,
Rotterdam, The Netherlands
SPRINGER SCIENCE+BUSINESS MEDIA, BV.
Library of Congress Cataloging-in-Publication Data
Competition in Europe essays ln honour of Henk de Jong I edited by
Peter de Wolf.
p. cm. -- (Studies ln lndustrial organization v. 14)
Includes bibliographical references.
ISBN 978-94-010-5469-0 ISBN 978-94-011-3326-5 (eBook)
DOI 10.1007/978-94-011-3326-5
1. Industrial concentratlon--Europe. 2. Industrial organizat ion
-Europe. 3. Competition--Europe. 1. Jong. H. W. de. II. Wolf.
Peter de. III. Series.
HD2844.C66 1990
338.S·048·094--dc20 90-20543
ISBN 978-94-010-5469-0
Printed on acid-free paper
AII Rights Reserved
© 1991 by Springer Science+Business Media Dordrecht
Originally published byKluwer Academic Publishers in 1991
Softcover reprint of the hardcover lst edition 1991
No part of the material protected by this copyright notice may be reproduced or
utilized in any form or by any means, electronic or mechanical,
including photocopying, recording or by any information storage and
retrieval system, without written permission from the copyright owner.
CONTENTS
Preface vii
I. Introduction - Growth without Bending
Henk W. Lambers
2. Some Aspects of Dynamic Analysis and Industrial Change 9
William G. Shepherd
3. Modeling Economic Change and Restructuring
- The Micro Foundations of Economic Expansion 33
Gunnar Eliasson
4. Growth of Large Enterprises and their Market Environments 61
Richard E. Caves
5. Industrial and Market Concentration in Europe 85
Remo Linda
6. Efficacy and Freedom of Mergers and Acquisitions 115
Pieter W. Moerland
7. The Contribution of Economists to the Origins of UK
Competition Policy 135
Denys Gribbin
8. Public Ownership versus Privatisation 163
Ken George
9. Sociopolitical Competition or Harmonization in the
European Community? Some Fundamental Reflections 187
Peter Oberender
10. Cooperation in Research & Development and European
Competition Policy 209
Alexis Jacquemin
II. Antitrust Treatment of Cooperative Research:
How Reasonable is the Rule of Reason? 229
William James Adams
12. Competition and Combination in the European Market Economy 265
Henk W. de Jong
Contributors 293
vii
PREFACE
Competition in Europe, which has been chosen as the title for the Essays in
Honour of Henk W. de Jong, contains two key concepts, that characterize
his scientific contribution to Industrial Organisation. Professor H.W. de
Jong is in the first place an economist who is highly inspired by the
dynamics of markets in general and the dynamics and conditions of compe
tition in particular.
In the second place, H.W. de Jong is a real European economist, not in
the sense that his theoretical insights are limited to Europe, but in the sense
that his ideas and policy suggestions - especially those concerning
competition policy - reflect his sincere involvement in the European inte
gration process and the economic conditions and perspectives of a Common
Market for the European Community. In his many illustrations of the
evolution of markets and the performance of enterprises in different
business environments, H.W. de Jong also demonstrates his knowledge of
historical and political aspects of different economies in Europe, often in
comparison with the United States and Japan.
I would like to express my gratitude to the authors, who all reacted
spontaneously when the idea for this book was raised. They made this
present for H.W. de Jong possible. Their contributions show a variety of
aspects of competition or absence of competition, running from the theo
retical foundations of dynamic market theories to the description of esti
mated effects of the latest forms of harmonized regulations with regard to
competition in the European Community. Besides being interesting reading,
these essays will also indicate the authors' evaluation of the scientific con
tribution of H.W. de Jong to Industrial Organization.
Special thanks also goes out to Emeritus Professor H.W. Lambers, H.W.
de Jong's promotor, for his personal introductory contribution.
Because we realised that the proper place of H.W. de Jong is among his
distinguished international academic friends, we asked him to be so kind as
to write down his valedictory address, so that it could be included in
Competition in Europe.
We appreciate the joint decision of Mrs. Marie Stratta of Kluwer
Academic Publishers and Professor W.G. Shepherd to include this volume in
the Series 0/ Industrial Organization, of which H.W. de Jong is one of the
initiators.
viii
I would also like to thank the Organising Committee of the Economic
Faculty, especially professor J.G. Lambooy (Dean at that time) and dr.
R.E.M. van den Brink, Paul Holle and Taco van Someren, for their confi
dence by asking me as editor for this book, dedicated to H.W. de Jong, who
was my promotor at the University of Amsterdam in 1987. Paul and Taco
have done a lot of work, including inviting most of the authors.
Finally we express our great admiration and gratitude to Mrs. Wil
Sommeling of the Erasmus University in Rotterdam, who is responsible for
the lay-out and the preparation of the total manuscript.
Peter de Wolf
Rotterdam, October 1990
1 INTRODUCTION
GROWTH WITHOUT BENDING
HENK W. LAMBERS
Professor Hendrik Wouter de Jong, of the University of Amsterdam, is a
pioneer in the dynamic theory of industrial organisation, or "market theory"
as it is now mostly called in Continental Europe.! That approach to micro
ecnomics focuses on the central institution of our economic order: the
market. It opens a wide field of research. Adherents to market theory form
a very loose union based on their common tendency to regard competition
among firms as the core, and the relations in the triad: "structure-conduct
performance" as the analytical framework.2 More loosely expressed, the
common aim is to get a deeper insight into the currents and cross-currents
that shape real markets.
In the words of De Jong: "I will try to establish that dynamic industrial
organisation theory may provide a solution to these apparent contradictions
by focusing on the heart of the matter: the competitive market process".3
De long has, indeed, contributed much to our knowledge and under
standing of the dynamics of markets. In the first place by a series of origi
nal research projects which combine acumen and precision. In the second
place by numerous publications based on critical and consistent theoretical
analysis as well as a wide knowledge of international literature. In the third
place as editor - or co-editor with Professor A.P. Jacquemin and Professor
W.G. Shepherd - of a series of publications - monographs or well-pro
grammed compilations of original essays - which have made a major impact
on the international co-operation in this branch of economics.
To single out one example: the two volumes of Mainstreams in Industrial
Organisation (1986)4 have, by the intelligent distribution of themes among
authors of different nationalities, set an example for a new kind of text
book in a field which is becoming increasingly transnational as the deve
lopment towards a mondial corporate economy proceeds.
De long is a sturdy man, in body as well as in mind. His retirement in
1990 from the chair of theory of external organisation at the University of
2
Amsterdam is, luckily, due only to regulations on the professorial retiring
age.
There was spontaneous consensus among friends and colleagues of many
nationalities that this was the opportune moment to show De Jong their
deep appreciation of his steadfast efforts. The outcome of that consensus is
this set of essays in his honour. They circle around the theme "Competition
in Europe", one of the first - and lasting - fields of investigation of De
Jong.
The list of contributors in itself suffices to show that De Jong is an out
standing international economist. That is why there is a book, and why, to
really honour De Jong, it had to be about dynamic market theory and its
potential for the understanding of European market developments.
At the same time, De Jong has remained a genuine Dutchman with a
Dutchman's deep interest in the working and steering of the Dutch
economy, especially its markets, both on the corporate and on the govern
ment side. His independency of mind is well known, as is his expertise.s
His opinions are sought after and listened to. In economics that does not
mean, of course, that they are always immediately accepted and acted upon.
If not, De Jong re-enters the fray.6 In the Netherlands he has vitalised the
dynamic approach to markets in theoretical economics. Therefore, the rest
of this introduction will be an attempt to draw some lines from his deep
roots in Dutch culture and Dutch academic economics to the autonomous
body of thought he has built.
H.W. de Jong was born (1925) and raised in Rotterdam. In 1944 he took
his matriculation; he had to wait until the liberation of the Netherlands in
May 1945 for the reopening of the Universities, when he enrolled as a stu
dent of the Nederlandse Economische Hogeschool at Rotterdam. As he took
his academic degrees, including his doctorate, at that institution, some lines
on its conduct and performance, and its possible influence, may be func
tional.
The Netherlands, a nation dependent on international trade, has always had
a deep respect for knowledge, integrated information. Not only to know
how but at least as much to know why. In 1859 an entrepreneurial banker
in Rotterdam stimulated his co-citizens to found an international library
with the admonition: "Trade without knowledge means fortune by coin
cidence".7 A few decades later, in this same Rotterdam some young
3
businessmen decided that the complexities of modern international business
called for the theoretical education of merchants. In 1913 they founded the
"Nederlandsche Handels-Hoogeschool", mostly known abroad as the "Rotter
dam School of Economics".8 It was the first institution of higher learning in
the Netherlands specifically directed at the study of economics.
Professor F. de Vries (1913-1945) was the first professor of general
that is, theoretical - economics. He set his analytic and learned mark on the
curriculum. When Rotterdam had proved a success, Amsterdam followed in
1921 by adding a faculty of economics to its University (growth-cycle
theory, no irony intended). Its architect was Professor Th. Limperg, a
highly intelligent chartered accountant and a very dominating personality.
Economics for him started with the internal organisation of the firm; that
finished, one turned outward to its environment: "the theory of external
organisation".
The undergraduate curriculum at Rotterdam had as compulsory subjects
economics, business economics, economic history, economic geography and
law. De Jong is one of the very few of the thousands of students who suc
cessfully passed through this curriculum who in his work has woven
together all those themes into one balanced pattern. But, thanks to academic
tradition, he still teaches "the theory of external organisation".
Pride and prejudice exist in the groves of Academy. The pride of Rot
terdam was that it was not prejudiced. The first advice was to observe and
have an open mind. As a consequence there were centres of common
interest but no "Schools" in Rotterdam. There was however a general style
in the approach to economics. Shepherd's remarks on soft analysis as
focusing on core ideas that are valid and testable9 would have been
welcomed. "Plausibility" and "Relevance" were household words.
When De Jong concludes his pioneering article "European Industrial
Organization" with the remark: "It is a dubious gain to acquire greater
scientific precision at the cost of relevancy"lO, one smiles at seeing a style
kept alive.
To this School, then, De Jong found his way in 1945. He must have been a
very attentive student. He recollected, in 1981, how Lambers - micro
economics - had told his students that supply and demand, of course, were
zones.l1 Owing to their slopes they had to intersect somewhere; he called
the meeting place the tolerance plane. "Tolerance" because within its limits
