Assessing the validity of the Structure, Conduct and Performance paradigm as theoretical framework for the application of competition policy in the long-term insurance sector of South Africa

[摘要] ENGLISH ABSTRACT:In the recent past the industrialised world bore witness to staggering growth in thesecondary and tertiary sectors of the economy. In the face of this growth processeconomic theory had to confront new challenges in explaining and interpretingeconomic phenomena. The complex nature of inter- and intra-firm relationshipsforced a pragmatic stance on policy makers to ensure that all actions are efficient andcompetitive.Two prominent schools of thought with contradictory viewpoints emerged. TheStructuralists built upon the foundations laid by Bain (1951) and Mason (1939). Thisimplied a theoretical framework, namely the Structure, Conduct and Perofrmanceparadigm (SCP paradigm) that could be used to explain inter- and intra-firm relationsaccording to a simple forward causality argument. The Structuralists' interpretationof the SCP paradigm provides strong support for the implementation of deconcentrationmeasures by competition authorities.The Chicago School, however, developed a counter-argument inspired by Demsetz's(1973) efficiency hypothesis. According to them, causality is reversed and deconcentrationmeasures are used at the expense of the most efficient firms.The thesis aims to study these contradictory arguments as well as their evolution inSouth Africa. Various researchers in South Africa have built on the arguments of theStructuralists and the Chicagoans regarding the manufacturing sector. The theoreticalmethods implemented by them will be applied to the long-term insurance industry toassess the validity of the SCP paradigm as a theoretical framework for the applicationof competition policy.

[发布机构] Stellenbosch University