Paradox of competition

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Paradox of competition in economics names a model of a situation where measures, which offer a competitive advantage to an individual economic entity, lead to nullification of advantage if all others behave in the same way. In some cases the finite state is even more disadvantageous for everybody than before (for the totality as well as for the individual). The term Paradox of competition (German : Konkurrenzparadoxon) was coined by German economist Wolfgang Stützel. It is about a case of a rationality trap.

Contents

Stützel distinguishes three categories of paradoxes of competition: [1]

  1. Circuit paradoxes
  2. Classical paradoxes
  3. Marx paradoxes

Examples

Partial sentence, Global sentence, lead and lag effect

Wolfgang Stützel analyses paradoxes of competition using the concept of Balances Mechanics (German : Saldenmechanik). Specifically he defines and distinguishes validness which is valid for individual economic entities respectively individual groups (Partial sentence), and validness which counts for the totality of economic entities (Global sentence).

Concerning the pursuit of export surpluses he distinguishes as follows: [5]

On overall economy examination (macroeconomics, aggregation problem) the benefit which individual economies want to achieve for themselves (legitimately) often appears as so called lead effect as against an inevitable lag effect of others. When lag effects are condoned, no paradox of competition arises. Solely because individual supply and individual demand turn out to be more elastic than overall supply and overall demand the classical paradox of competition can occur. [6]

See also

Literature

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References

  1. Rolf-Dieter Grass, Wolfgang Stützel: Volkswirtschaftslehre. München 1988, p. 156-165
  2. Johannes Schmidt, 2012: Sparen – Fluch oder Segen? In: Normative und institutionelle Grundfragen der Ökonomik: Lehren aus der Krise für die Makroökonomik. Archived 2013-10-23 at the Wayback Machine (PDF; 125 kB) p. 12 f.
  3. Wolfgang Stützel in: Zins, Kredit und Produktion. Tübingen 1952. Einleitung der Herausgebers. p. 9: „Alle Länder wollen [...] mehr exportieren als importieren. Es ist wieder von vornherein klar, daß sie nicht zum Ziele kommen werden. Grundsätzlich theoretisch gibt es hier zwei Möglichkeiten. Entweder betreiben alle Staaten aktive Exportförderung und lassen die Importe frei: In einem Taumel internationaler Austauschlust wird das Gesamtexportvolumen steigen, ohne daß in summa irgend jemand mehr exportiert als importiert hätte. Oder aber und das ist das Wahrscheinlichere und leider immer wieder historisch Gegebene: Man wird zur Gewinnung eines aktiven Leistungsbilanzsaldos die Importe zu beschränken suchen. Damit kann auch kein Land mehr seinen Export steigern. Im Gegenteil. Das allgemeine Streben nach einer Differenz zwischen Export und Import wird das Gesamtaustauschvolumen kumulativ zurückgehen lassen.“
  4. Wolfgang Stützel: Paradoxa der Geld- und Konkurrenzwirtschaft. Aalen 1979. p. 403.
  5. Wolfgang Stützel: Paradoxa der Geld- und Konkurrenzwirtschaft. Aalen 1979. p. 404.
  6. Wolfgang Stützel: Paradoxa der Geld- und Konkurrenzwirtschaft. Aalen 1979. p. 369.

This article is a translated version of the German Wikipedia article.