Competition Policy for High Technology Industries
AbstractI model optimal product-market competition policy when industriesdiffer inthe potential for quality-improving technological advance. In a two-periodmodel, a competition authority with limited resources administers adeterrence-based competition policy toward two industries. In one oftheindustries, an incumbent firm chooses the level of resources toinvest in aquality-improving R&D project. In the other industry, product qualityisconstant. The competition authority cannot commit in advance to thetoughness of competition policy in the post-discovery world. Optimalpolicy requires the competition authority to administer a toughercompetition policy before innovation, all else equal, the greater thepotential quality improvement; patent protection may increase R&Dintensity, but worsens market performance.
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Bibliographic InfoPaper provided by Tinbergen Institute in its series Tinbergen Institute Discussion Papers with number 00-010/2.
Date of creation: 14 Feb 2000
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Web page: http://www.tinbergen.nl
Other versions of this item:
- NEP-ALL-2000-06-29 (All new papers)
- NEP-IND-2000-06-29 (Industrial Organization)
- NEP-INO-2000-06-29 (Innovation)
- NEP-REG-2000-06-29 (Regulation)
- NEP-TID-2000-06-29 (Technology & Industrial Dynamics)
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