CHAPTER 5 ASSESSMENT OF COMPETITION IN THE SECTOR Assessment of the degree of competition in a sector is important from the viewpoint of, first, implications on consumer welfare, second, extent of pressure for innovation, productive efficiency and cost minimization and, third, to enable a transition from internally competitive to an internationally competitive market. Therefore, determining the extent of competition indifferent sub-sectors of the automotive sector will help in identifying if excessive profits are being made due to monopolistic pricing behaviour, whether the process of technology deepening is taking place and if the sector is emerging as competitive in international markets and the process of exporting has commenced. The chapter is organised as follows Section 4.1 highlights the key elements of the methodology used to assess competition and contestability in a market. Section 4.2 identifies measures of competition and contestability within a market. Section 4.3 assesses the extent of competition indifferent sub-sectors of the automotive sector and proposes some steps for increasing competition.
