Banana Trees and Open Competitive Markets

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Sean Heather, Jeremie Waterman, Aug 11, 2008

In preparing to write this piece on the Chinese Antimonopoly Law, one of us was reminded of a recent visit to a botanical garden. Among the collection of meticulously cared for plants was one extremely bent banana tree. The tree was close to 25 feet in length and full of bananas, but rather than standing erect it had arched itself completely over, nearly touching the ground. It looked straight from the imagination of children’s book author, Dr. Seuss. The garden’s botanist explained the reason for the contorted tree. Unlike banana trees found in their natural habitat, this tree has been nurtured in the closed environment of a greenhouse. While it looked like a perfect specimen (minus the bend in its trunk), it was actually quite weak and could not support the weight of the bananas. In their natural habitat, the botanist explained, the wind acts as exercise for trees strengthening their trunks. This tree, which had lived from infancy to maturity in the sheltered greenhouse, would be unable to withstand the first gust of wind. The banana story is an excellent metaphor for the application of competition policy. Countries that act as greenhouses by adopting competition policies that shelter prized domestic companies from the competitive winds of the open market create mature companies that fail when they try and compete in the global marketplace. In vivid contrast, countri…

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