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Anti-involution

From the Collaborative Bond and Money Market Data Portal

'Anti-involution' refers to policy or a set of measures taken to combat involution. As involution is also described as 'irrational' or 'destructive competition' which occurs when there is intense competition without returns on profitability, anti-involution is often implemented in these kinds of cases. Examples of anti-involution policy include, but are not limited to:

  • Legislative revisions: amending pricing laws to prevent companies from selling below production costs (at a loss)
  • Corporate restructuring: within firms, this could include the implementation of downsizing, or increasing M&A to reduce overcapacity
  • Competition correction: regulatory bodies can consolidate smaller firms into fewer larger ones, or break up the large firms engaging in the involution.
  • Increasing oversight: Enhancing regulatory oversight in specific sectors or economy-wide
  • Curbing outdated capacity: encouraging producers with excess capacity to unload, or closing uncompetitive or outdated facilities 
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