The Return of Wasteful Competition

Source: EconLog
by James Broughel

“It is a common misconception that competitive markets yield efficient outcomes. While competition can spur increased effort, that effort need not be directed toward anything productive. More competition has a dark side as well—the tendency to produce unnecessary duplication of efforts and waste. That competition can be problematic rather than efficient is an idea today sometimes associated with investor Peter Thiel, but the reality is this view is hardly new. In fact, the idea that competition is wasteful resurrects a critique made by economists more than a century ago.” (07/09/24)