Does competition raise standards?

I was listening to some government suit on the radio yesterday, talking about the coming changes to the NHS, and he said something that you hear all the time:  competition drives up standards.  Does it?  Does it really?  I have been thinking about the other areas where there is no natural competition and the government has tried to provide some, to see if I think this has caused standards to rise.  I really can't say that they have.  The Post Office, British Telecom, and the National Rail network all seem to me to have lowered their standards since forced to compete. 

The Gas and Electricity companies, who still pipe the same gas and electricity into our homes, don't seem any different for the notional competition which has been introduced, except for the proliferation of scamming salesmen who tour the country trying to persuade elderly people to switch to another supplier without realisng what they are doing.

I've become a bit of a sceptic when it comes to the likelihood of competition driving up standards where there is no real competition... where the contest is simply contrived by administration and bureaucracy.  My feeling is that the main interest of bureaucrats is to create more bureacracy, and the main job of administrators is to justify their posts.  I don't see there being massive changes for the better and standards being driven up.

Even in the free market, I think a lot of the things which we are told about supply and demand are mostly bullshit.  Let me tell you a story.

I have enormous breasts.  I'm not saying that to draw attention to myself, but it is a matter of verifiable fact that the size of my breasts far exceeds the sizes stocked by such high street companies as Messrs Marks and Spencer.  Once upon a time, in 1998, when I was new to the internet and exploring online forums, I stumbled into a forum apparently for big breasted women.  I thought to find fellow sufferers, sharing tips on places to buy our corsetry without breaking the bank, and how to live with big breasts without breaking our backs.

Of course, it wasn't in the nature of a self-help group, but a group for men who like big breasted women and - as far as I could see - a bunch of women pretending to be accessorised with large breasts.  When I gladly disclosed the size of mine one of the people in the chat room offered me two chairs - one for me and one for my breasts, and the banter in the room made it plainly obvious that they did not believe me.  I was a little bit naive then... I am a lot wiser now.

Anyway... there is an international company of bra manufacturers which boasts that their Doreen design is the best selling bra in the world, with so many thousands sold every year.  It is little wonder, as these bras are the only bras commonly available for people of my size.  It isn't possible to obtain other bras unless you pay two, three or four times as much - and even then it may be impossible to get the right size.

This means that although there is a demand - a strong demand - from women of my size for different, prettier, more feminine bras to accommodate women with enormous breasts, the only type of bra available is this one.  Thus it becomes the most successful bra in the world, not because it is the bra demanded by women, but because it is the only choice... a hobson's choice of this bra or no bra drives women to buy it.  Or else small children may die.  I could easily crush half a dozen five years olds if I run without a bra at all.

So supply and demand doesn't necessarily mean having what you want supplied to you... it may mean having whatever is available supplied to you as the best of a bad bunch of options.

When competition is added into the mix, it tends to be that prices drop rather than competition raising standards.  If another bra manufacturer muscled in on the business, this would be the most obvious way to beat the others - by dropping the price.

I'd be very interested to know if anyone had any examples of times when competition between companies or suppliers, had actually been proved to raise standards.  Let me know in the comments if you can find any examples.