Number 12-93

By Dennis Polhill

Executive Summary

Unfair Competition exists when a government or quasi-government entity takes
advantage of its tax exemption and other privileges to supply private goods to the market
in competition with private suppliers. Unfair Competition adversely effects all
Americans. Small businesses are most vulnerable. When jobs are lost, the poor, the
unemployed, and women are especially damaged. When private enterprises are replaced
with less efficient government enterprises, national productivity and competitiveness are
adversely impacted. When the tax base is diminished, all taxpayers are injured.
The Federal government has investigated Unfair Competition frequently since 1980. In
1980, the Small Business Administration did a study which yielded numerous grievous
examples and extensive recommended actions. In 1986, a White House Conference on
Small Business labeled Unfair Competition as the third most serious concern in the
country for small business. In 1987, the General Accounting Office surveyed 27,000
businesses, nearly two-thirds of which were found to be suffering a degree of Unfair
Competition.
In Colorado at least 34 industries are currently suffering damage as a result of Unfair
Competition from government. Unfair Competition is also perpetrated by quasigovernment
agencies that enjoy either monopoly privilege, tax exemptions or regulation
exemptions that are granted by government. Among the steps necessary to a solution are
the following:

  • All regulations which do not apply to government business entities, but which do apply to private industry should be either abandoned or enforced uniformly.
  • Agencies of governments that supply private goods to the market should lose their tax exempt status and other privileges.
  • Governments should adopt accounting practices and management approaches that reveal more closely the true cost of service provided.

Entire Paper: Unfair Government Competition Against Small Business (PDF)