Government should be able to increase competition in supermarket in Australia

Comments on Font Michael Costa “Not so super markets”, 3/07/2009, http://www.theaustralian.news.com.au/story/0,25197,25724260-5013480,00.html

Costa discussed an important issue for a more competitive supermarket in Australia, that is, the physical environment for potential competitors to contest with the existing majors. Planning processes and practices may be a factor and that should be addressed by government.

Comments by Sven Lotzvie of Brisbane are also insightful. Australia does suffer from small sizes in the world of globalisation. Government restrictions on international entry and competition are unhelpful to a more competitive market. Those restrictions need to be removed.

There is also an issue of unfair discrimination due to the lack of competition that also needs to be addressed. This unfair discrimination is the practice by a super marketer to charge the same item with different prices at different locations with no differences in cost factors.

Competition watchdog should be able to address this issue. Of course, this requires the competition watchdog to work efficiently and smartly as possible. It needs to be more diligent itself.

By addressing this issue appropriately, the adverse effects of past planning legacy on competition can be minimised. It also lessens the needs for every super market location to have available space for competitors.

The federal government thus has several tasks to do to increase the competition of super markets in Australia. They should not be too difficult.

Questions for Harry Clarke on national interest

These are some questions that I posed to Harry Clarke as comments to his article / blog "More on Rio, BHP-Billiton & Chinalco’s rejected love", or reply to his questions for me, 9/06/2009, http://www.harryrclarke.com/2009/06/09/more-on-rio-bhp-billiton-chinalcos-rejected-love/

I have commented on this article before. But Harry asked me to demonstrate my argument agaist his argument that the use of the Cournot Nash model is right in this case. Here are my questions.

hc, some quick points to discuss with you. First how do you define national interest clearly so that whoever is reviewing foreign investments can apply it consistently across the board?

Second, is your argument of monopoly power by Australia correct or informed as it should be? Both Rio and BHP say they would market their shares of iron ore production separately that seems to contradict your argument.

Third, is either Rio or BHP wholly owned by Australians, so Australia has the monopoly power? If they are not, why an increase in Chinalco's share in Rio would reduce any monopoly power that Australia has?

In terms of models, why is the Cournot-Nash story right in this case? Isn't the case that that model assumes perfect competition on the demand side? If that is the case, is that consistent with your argument of monopsony power demand? If you have monoply powers on both the supply and demand side, why is that model applicable?