Innovation matters

This book proposes shifting competition policy from price-centric to innovation-centric. It argues protecting innovation incentives and dynamic competition should be priorities over static prices, especially in high-tech industries.

Recommended for: Economists, policy-makers, antitrust regulators, and academics interested in the intersection of competition policy, innovation, and the high-technology economy. This book provides an in-depth, scholarly examination of these complex and important topics.

You will:

Gain a deeper understanding of the distinctive features of the high-tech economy and why current analytical tools used by antitrust enforcers may be insufficient for assessing innovation concerns.
Explore the theoretical frameworks, such as the “replacement effect” and Schumpeterian theories, that shape our understanding of the relationship between market structure, firm behavior, and innovation.
Examine empirical evidence on the effects of competition, mergers, and other market dynamics on innovation outcomes.
Learn from case studies of merger enforcement and antitrust actions involving high-profile technology companies like Microsoft and Google.
Develop insights into the challenges and considerations involved in crafting competition policies that effectively promote and protect innovation in a rapidly evolving, technology-driven economy.
Become equipped to critically evaluate existing competition policy approaches and consider alternative, innovation-centric frameworks that may be better suited to the modern economic landscape.
Engage with the nuanced, evidence-based arguments and policy recommendations presented by a leading economist in the field of competition and innovation.
Explore the broader implications of shifting towards an innovation-centered approach to antitrust enforcement and competition policy.

Detailed Overview

The author first outlines how competition policy has traditionally focused on price rather than innovation. However, economic theory indicates innovation benefits consumers through new products and services. The book analyzes frameworks like Arrow’s replacement effect and Schumpeter’s views on competition and innovation. It also reviews empirical studies on competition, mergers, and innovation. The author finds current tools not optimized for high-tech industries characterized by network effects and cumulative innovation processes. Real-world examples of Microsoft and Google enforcement actions are examined. Recommendations are made for assessing innovation impacts of mergers, conduct, and standards. The openly accessible work aims to advance ongoing policy discussions as agencies regulate digital platforms.