tion by the down-to-earth regulators into the industrial organization of specific sectors. The reason for this verdict is worthwhile to spell out in some detail. In the first place, restricting competition to control excessive competition in the sense we have identified boils down to the protection of producer's benefits at the expense of consumer's benefits. Unless there is a clear social agreement that the producer's benefits should be given priority over the consumer's benefits, it seems hard to justify such a lopsided treatment between the two components of social welfare, viz., net social surplus. Nevertheless, there is a regrettable tendency towards the implementation of producer-oriented regulation for the reason which Vilfredo Pareto (1927, p.379) uncovered well ahead of his own time: "A protectionist measure provides large benefits to a small number of people, and causes a very great number of consumers a slight loss. This circumstance makes it easier to put a protectioinist measure into practice."

Although the argument in support of the meaningful sense in which we can talk about the “social excessiveness of competition” is useful and revealing, we should be carefully on guard so as not to be exploited by those who have too much vested interest to leave matters to be determined by free and impersonal force of competition. The following acute warning by Avinash Dixit (1984, p.15) seems to be worthwhile to keep always in mind:

Vested interests want protection, and relaxation of antitrust activity, for their own selfish reasons. They will be eager to seize upon any theoretical arguments that advance such policies in the general interest. Distortion and misuse of the arguments is likely, and may result in the emergence of policies that cause aggregate welfare loss while providing private gains to powerful special groups.

To conclude this section on the possible excessiveness of competition from the welfare-theoretic viewpoint, let us remind ourselves that the validity of excess entry theorem as well as its various variants hinge squarely on the three basic assumptions: single homogeneous product, large fixed cost, and oligopolistic competition. If any one of these assumptions fails to be true, the excess entry theorem, or the variant thereof, is easily invalidated. For example, if the industry is producing a wide spectrum of differentiated commodities, the entry of a new firm, more often than not, accompanies a further widening of the product spectrum, which results in the expansion of the freedom of choice on the part of consumers. With the addition of this new channel through which firm entry can exert influence on social welfare, the excess entry theorem may well fail to apply to the industry in question. The important moral is that the theoretical verdicts on the welfare effects of competition hinge squarely on the specification of industry characteristics and types of competition, so that there exists no universally applicable conventional wisdom in this slippery arena of welfare and competition.

Thus, the general moral of our exploration on welfare and competition seems to be as follows. Just as “[d]emocracy is the worst form of government except all those other forms