Antitrust in Innovative Industries
AbstractWe study the effects of antitrust policy in industries with continual innovation. A more protective antitrust policy may have conflicting effects on innovation incentives, raising the profits of new entrants, but lowering those of continuing incumbents. We show that the direction of the net effect can be determined by analyzing shifts in innovation benefit and supply holding the innovation rate fixed. We apply this framework to analyze several specific antitrust policies. We show that in some cases, holding the innovation rate fixed, as suggested by our comparative statics results, the tension does not arise and a more protective policy necessarily raises the rate of innovation.
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Bibliographic InfoPaper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 11525.
Date of creation: Aug 2005
Date of revision:
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Other versions of this item:
- L40 - Industrial Organization - - Antitrust Issues and Policies - - - General
- O31 - Economic Development, Technological Change, and Growth - - Technological Change; Research and Development; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
This paper has been announced in the following NEP Reports:
- NEP-ALL-2005-08-13 (All new papers)
- NEP-COM-2005-08-13 (Industrial Competition)
- NEP-IND-2005-08-13 (Industrial Organization)
- NEP-INO-2005-08-13 (Innovation)
- NEP-REG-2005-08-13 (Regulation)
- NEP-TID-2005-08-13 (Technology & Industrial Dynamics)
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