Competition Policy for High Technology Industries
I 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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Volume (Year): 1 (2001)
Issue (Month): 4 (December)
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- Stephen Martin, 1998. "Product market competition policy and technological performance," CIE Discussion Papers 1998-01, University of Copenhagen. Department of Economics. Centre for Industrial Economics.
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- Saïd Souam, 1997.
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- Waterson, Michael, 1990. "The Economics of Product Patents," American Economic Review, American Economic Association, vol. 80(4), pages 860-69, September.
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