Innovation Matters: Competition Policy for the High-Technology Economy
Competition policy and antitrust enforcement have traditionally focused on prices rather than innovation. Economic theory shows the ways that price competition benefits consumers; and courts, antitrust agencies, and economists have developed tools for the quantitative evaluation of price impacts. Antitrust law does not preclude interventions to encourage innovation, but over time the interpretation of the laws has raised obstacles to enforcement policies for innovation. This book proposes a shift from price-centric to innovation-centric competition policy. It reviews the theoretical and empirical literature related to competition, mergers, and innovation and provides examples of merger enforcement by US and European antitrust agencies in cases that alleged innovation concerns. Antitrust enforcement should be concerned with protecting incentives for innovation and preserving opportunities for dynamic, rather than static, competition. In a high-technology economy, innovation matters.