Message from Director of the CPRC
Message from Director of the CPRC
Director of the Competition Policy Research Center (Professor, Faculty of Social Innovation, Seijo University)
Hiroyuki Odagiri
"Monopoly, besides, is a great enemy to good management, which can never be universally established but in consequence of that free and universal competition which forces every body to have recourse to it for the sake of self-defence."*1
More than two centuries ago, Adam Smith thus emphasized the importance of competition. Putting it together with his famous sentence that
"he intends only his own gain, and he is in this, as in many other cases, led by an invisible hand to promote an end which was no part of his intention"(emphasis added),*2
people now call the principle that competition is indispensable for economic efficiency the "Invisible Hand Theorem". It is the pillar of competition policy.
Also important, particularly in today's economy, is competition through innovation:
"it is not that kind of competition (i.e., price competition) which counts but the competition from the new commodity, the new technology, the new source of supply, the new type of organization" (parenthesis added)*3.
By so saying, Schumpeter maintained that it is the competition on innovation that matters and that fosters economic growth and long-run wealth through what he called the process of "creative destruction".
Smith discussed static competition while Schumpeter discussed dynamic competition -- a plausible difference in view of the fact that Smith was born before Industrial Revolution and Schumpeter lived through the first half of the 20th Century when industrial R&D started to grow. Nevertheless, they apparently shared a strong belief that competition is the engine of capitalist economies through securing efficiency and innovation and thereby improving the nation's welfare. It is exactly for this reason that competition policy is so indispensable.
To pursue competition policy rightly requires an active interaction between worldwide academic community and practitioners, such as JFTC. It is to promote this interaction that Competition Policy Research Center (CPRC) was founded in 2003. During the 5 years since then, CPRC produced 5 international symposia, 10 open seminars, 23 reports, and 29 discussion papers under the directorship of Professor Suzumura. With myself now succeeding him as the director, I cannot sufficiently express my respect and gratitude for him and other Center staff on their effort for establishing the basis of CPRC and maintaining a high standard.
I used the terms, static competition and dynamic competition. However, they are often extremely difficult to define and measure. Also they can be mutually inconsistent. Thus required is to evaluate the effects, positive or negative, a certain firm behavior may have on static and dynamic competition and for promoting innovation. In order to facilitate such evaluation, both theoretical and empirical findings have to be accumulated and applied.
It is, first of all, such interaction between academic knowledge and policy implementation that CPRC is expected to foster.
The second interaction that CPRC should promote is between academics and policymakers, most notably JFTC. Whereas the first interaction referred to an interaction among different types of knowledge, this second interaction needs to take place between different types of people. For this purpose, CPRC has to support and nurture researchers on competition policy. It also has to create opportunities in which academics and policymakers communicate with each other.
The third interaction that has to be promoted is between law scholars on the one hand and economists and management scholars on the other. Unfortunately, they often use different languages and discuss from different viewpoints. However, their collaboration is acutely needed for the implementation of competition policy. It is CPRC's important function to supply opportunities for them to communicate with each other through, for instance, joint research projects and seminars.
Fourthly and lastly, CPRC has to promote interaction between Japan and elsewhere. The outcomes of competition policy research in Japan have to be publicized to overseas and those in overseas have to be introduced into Japan. A forum has to be prepared in which both Japanese researchers and overseas researchers participate and exchange knowledge. CPRC's international symposia have been providing such a forum and we intend to continue this effort.
To conclude, it is CPRC's mission to promote interaction in four fronts - between academic knowledge and policy implementation, between academics and policymakers, between law study and economics, and between Japan and elsewhere. It is a huge task, particularly in view of the small scale of the center, but it has to be done. Your support and advices would be greatly appreciated.
*1 Adam Smith, An Inquiry into the Nature and Causes of the Wealth of Nations, Volume 1, Oxford: Oxford University Press, 1976, pp.163-164 (the first edition being originally published in 1776). *2 Ibid,p.456. *3 J. A. Schumpeter, Capitalism, Socialism and Democracy. New York: Harper and Row, 1942, p. 84.
