Measuring market power and competition policy in Hong Kong

Unlike most other advanced countries, Hong Kong does not yet have a comprehensive competition law. Yet lack of competition and abuse of market power exist in many important sectors, as found by a series of studies issued by the Hong Kong Consumer Council in the 1990s. We describe in detail the approach of the Consumer Council in measuring market power in various markets, particularly its use of the conventional structure-conduct-performance paradigm combined with the unique roles of land scarcity and market contestability. The second part of the chapter provides an evaluation of the current competition policy in Hong Kong, which came into effect in 1998 as a result of the Consumer Council’s studies.