In the words of the Hilmer review, seminal in the establishment of the NCC: If Australia is to prosper as a nation, and maintain and improve living standards and opportunities for its people, it has no choice but to improve the productivity and international competitiveness of its firms and institutions. [...] In their seminal paper Lipsey and Lancaster state the conditions for Pareto Optimality (the same conditions alluded to by Samuelson and Abelson) and the implications of any deviation from the conditions of perfect companion as follows: It is well known that the attainment of a Paretian optimum requires the simultaneous fulfillment of all the optimum conditions. [...] Furthermore, the principles often seem to be forgotten in the context of specific problems and, when they are rediscovered and stated in the form pertinent to some problem, this seems to evoke expressions of surprise and doubt rather than of immediate agreement and satisfaction at the discovery of yet another application of the already accepted generalizations.16 As discussed in the sections below. [...] This in turn imposes costs, and distorts the behaviour, of both consumers and other firms (for example airlines) in ways that transfer welfare to the owner of the airport and reduce the productivity of the economy as a whole. [...] The incentive for the student is to get the qualification with as little effort as possible, whilst the incentive for the training provider is to provide the training and the certification with as little effort and expense as possible.
Authors
- Pages
- 30
- Published in
- Australia
Table of Contents
- Summary 5
- Introduction 6
- Privatised failure, inefficiency and waste 8
- Electricity generation 8
- Advertising and administrative spending in the caring economy 9
- What is needed for markets to promote economic welfare? 10
- Benefits of competition 10
- Deviations from the competitive ideal 11
- Australian deviations from competition 13
- Economic criterion for a well-functioning market 16
- 1 Numerous small suppliers and customers 17
- ‘Thin markets’ 17
- 2 Freedom of entry and exit 18
- 3 Homogeneity of product 19
- Measurement issues 20
- 4 Perfect information 21
- Vocational education 22
- The caring economy 23
- Aged care 23
- Childcare 24
- 5 No transactions costs 24
- 6 Absence of externalities 25
- 7 Exogenous tastes 26
- The Conditions Grid 27
- Conclusion 28
