Phương pháp tiếp cận của ông 'giới hạn' sử dụng những sự kiện cách điệu và hiểu biết lý thuyết để dự đoán, trong giới hạn dự kiến, giá đầu ra cân bằng nên nói dối - và thông qua mô hình chính thức để phân tích và thử nghiệm cho một thực tế như vậy giới hạn phạm vi của kết quả mong đợi. | 15 European Competition and Industrial Policy 347 very important contribution towards marrying formal modelling with reality. His bounds approach employs stylised facts and theoretical insights to predict where within expected bounds price-output equilibrium should lie - and adopts formal modelling to analyse and test for such a reality-bound range of expected outcomes. In the absence of perfect competition or perfect contestability there exists scope for the government to step in to restore perfectly competitive conditions. A problem here is that in the absence of perfect competition across all industries in the economy intervention in one market is not guaranteed to improve efficiency the problem of second best except under rather restrictive assumptions Gilbert and Newberry 1982 . This limits the power of IO to provide useful public policy prescriptions which is its purported aim. The above is just one of the problems of the microeconomic and IO approach. Other related problems relate to restrictive assumptions which include perfect information knowledge optimizing behaviour inter-firm co-operation being seen mainly as price collusion and technology innovations being exogenous or at best influenced by the type of market structure . In this context perfect competition in effect implies the absence of any competition at In addition the whole focus on efficient allocation of scarce resources ignores the fundamental issue of resourcecreation. While changes in resource allocation can lead to changes in resourcecreation it is far from evident that the efficient resource allocation at any given time is the only way to affect resource-creation. Indeed resource-creation is automatically related to inter-temporal issues which poses another problem for the neoclassical perspective - its focus is on comparative statics not on inter-temporal efficiency. The last mentioned involves knowledge and innovation which the neoclassical view considers to be exogenously given .
