Scholarly Comments on Academic Economics

The Meaning of Competition

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Abstract

Reprinted here, with kind permission from University of Chicago Press, is the text deriving from a lecture given in 1946. Hayek discusses what, in plain language, the word competition means, and affirms that meaning. He teaches that the plain-language meaning is different than, even in important respects opposite from, the meaning conceived by the science-fiction model known as “perfect competition.” Meanwhile, Hayek speaks of competition that is free, “in the traditional sense,” and he implies that, by and large, with greater freedom there is greater or more intense plain-language competition. The essay, then, is in large part about the argument that, because competition in some market is “imperfect,” government action is needed—action of a sort that, in Hayek’s view, usually treads on freedom, reduces plain-language competition, and harms the common good.