George G. Djolov (2008): The Economics of Competition- The Race to Monopoly. Jaico Publishing House, Mumbai. Pages: 322 Price: Rs. 495.00

Competition is the essence of modern market structure and is the basis for the success of free market economy as advocated by Adam Smith, which ultimately leads to the establishment of equilibrium in various sectors of the economy. In the present book, the author explains the weaknesses of the prefect competition model as a policy guide. He uses comparative statics theory to amplify this and then builds on an empirical case study of the pharmaceutical industry in South Africa. This book is an attempt at scientific explanation of the competitive process; it explains that monopoly unsupported by the government regulation and government barriers to entry is not a hindrance to competition as the competition itself takes care of that, not always immediately but surely. Chapter 1 and 2 provide an introduction of the theme and structure of the book with an overview of competition and monopoly. Chapter 3 explains the concept of perfect competition with an emphasis on the distinction between the short run and the long run in judging the competitiveness of the markets. This chapter also throws light on social costs associated with monopoly and existence of cartels in the market. Chapter 4, 5 and 6 deal with perfect competition and rivalry under the competition process. To explain it, the Clemens-Cocks Model has also been discussed. Chapter 6 extends this discussion to examine barriers to entry, economies of scale, product differentiation and absolute cost advantages. Chapter 7 examines various barriers to competition with reference to market power. Chapter 8 examines some key aspects of market power like horizontal mergers and acquisitions. This also brings in picture price discrimination with respect to innovation and new product development. This chapter throws light on why price discrimination results in a reduction of output level, compared with the output level of perfectly competitive model. Chapter 9 discusses the economic rationale for competition policy. It advocates the view that just the size does not constitute monopoly. The size may just be a consequence rather than the cause of profits. Chapter 10 discusses some new measures of market concentration. These measures show how market shares are distributed among various firms at a point in time. Chapter 11 and 12 give theoretical exposition by giving a case of South African pharmaceutical industry. The theme is to ascertain if monopoly power exists here or not. Thus, in a way, this chapter examines as to how close the industry is to perfectly competitive market. Chapter 13 and 14 describe the impact of mergers and acquisitions on the private and public markets using some empirical perspective as to the effect of such transactions on the level of their concentration in the pharmaceutical industry. In Chapter 14, a micro industry study is also conducted, assessing the level of competitiveness across therapeutic markets in both the private and public sectors. Chapter 15 concludes the theoretical exposition and its empirical findings presented. On the whole, the book has made a good attempt to examine the competitive process. It clearly brings out that various market structures such as perfect competition, oligopoly and monopoly are not mutually exclusive, and neither do they work in isolation. Meaningful examination of competitive process brought out in this book make it extremely useful for students and teachers of microeconomics, industrial economics, industrial organization, managerial economics, and marketing strategy. Bharat Garg Asia Pacific Institute of Management New Delhi