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2007/07/16 - José Carlos Rodríguez - La Gaceta de los Negocios

Bumper Cars

I was still a child when I discovered what competition was all about. During my hometown's festivals, only one ride interested me: bumper cars. There were two bumper car rides right next to each other. I remember walking up to one of them and buying six rides for 500 pesetas. When I saw that the man at the ticket booth had handed me seven or eight tickets, I told him he had given me too many.

His amused and complicit smile made me think that I wouldn't go to that other bumper car ride. But, I reconsidered and did exactly that, just to see what the other ride would offer me for my 500 pesetas. This is how I discovered the workings of competition.

I also remember in my first year majoring in journalism at university, they gave us an economics 101 course. I liked it, but there were things I didn't understand. When the professor and the textbook talked about competition they referred to a situation in which businesses offered the same product at the same price. This seemed absurd to me since I thought it was obvious such businesses were not competing at all. "Perfect Competition," I think it was called. I didn't understand anything.

I figured we were getting economics for journalists. What more could I expect? Real economic texts explained what I witnessed in the street; they realized the bumper car ride gave me extra tickets. But later I got interested in economic theory and ran up against the same thing I had been taught at university. I had to search on my own to find authors who wrote about competition as rivalry among companies to win over consumers. This is how I bumped into Ludwig von Mises, Friedrich Hayek, Israel Kirzner and Murray Rothbard. Reading them recalled my childhood experience at the festivals.

Competition is rivalry. It is a discovery process, as Hayek says. And it is where good entrepreneurs are compensated for their efforts. But European commissioners clearly read different books. This is why they are taking aim at Microsoft, Schneider and Telefónica. Either this, or when they were kids they never rode the bumper cars.

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