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Competition Policy and Innovation


  • David Encaoua
  • Abraham Hollander


The question addressed by the paper is whether standard procedures and widely accepted insights of competition policy remain valid when one deals with potentially anti-competitive conduct in innovative industries. The question of appropriateness arises because competition in these industries displays features that are radically different from those encountered in traditional sectors of the economy. Competition is for the market rather than in the market, dynamic aspects of competition matter more than allocative aspects, intellectual property rights (IPR) reinforce network effects present in knowledge-based industries. The paper examines why these differences matter with respect to market delineation, assessment of intensity of competition, and predatory conduct. It also raises the question as to what extent competition law limits the innovators' rights not to license their inventions to others, especially when they correspond to essential facilities . It explores the problem created by excessive protection as well as the hold-up problem that arises in a context of sequential innovations. It examines the antitrust position in regard to the treatment of collaborative arrangements among holders of IPRs, such as cross-licences , patent-pools , and joint-standard settings. Finally, it presents a discussion on a possible role of competition law in shaping intellectual property laws in order to benefit from the complementarity between intellectual protection and antitrust rules. Copyright 2002, Oxford University Press.

Suggested Citation

  • David Encaoua & Abraham Hollander, 2002. "Competition Policy and Innovation," Oxford Review of Economic Policy, Oxford University Press, vol. 18(1), pages 63-79, Spring.
  • Handle: RePEc:oup:oxford:v:18:y:2002:i:1:p:63-79

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    References listed on IDEAS

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    Cited by:

    1. David Encaoua & Yassine Lefouili, 2010. "Choosing Intellectual Protection: Imitation, Patent Strength and Licensing," NBER Chapters,in: Contributions in Memory of Zvi Griliches, pages 241-271 National Bureau of Economic Research, Inc.
    2. Christine Greenhalgh & Padraig Dixon, 2002. "The Economics of Intellectual Property: A Review to Identify Themes for Future Research," Economics Series Working Papers 135, University of Oxford, Department of Economics.
    3. Encaoua, David & Guellec, Dominique & Martinez, Catalina, 2006. "Patent systems for encouraging innovation: Lessons from economic analysis," Research Policy, Elsevier, vol. 35(9), pages 1423-1440, November.
    4. Khazabi, Massoud, 2004. "Innovation and cooperation with horizontal spillovers," MPRA Paper 39497, University Library of Munich, Germany.
    5. Fabio Lamantia & Mario Pezzino, 2017. "Dynamic analysis of discontinuous best response with innovation," The School of Economics Discussion Paper Series 1708, Economics, The University of Manchester.
    6. Wolfgang Kerber & Simonetta Vezzoso, 2004. "EU Competition Policy, Vertical Restraints, and Innovation: An Analysis from an Evolutionary Perspective," Marburg Working Papers on Economics 200414, Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung).
    7. repec:hal:journl:halshs-00415747 is not listed on IDEAS
    8. David Encaoua & Yassine Lefouili, 2009. "Licensing weak patents," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) halshs-00415747, HAL.
    9. Dolfsma, Wilfred, 2005. "Towards a dynamic (Schumpeterian) welfare economics," Research Policy, Elsevier, vol. 34(1), pages 69-82, February.
    10. Graevenitz, Georg von, 2005. "Integrating competition policy and innovation policy: the case of R&D cooperation," Discussion Paper Series of SFB/TR 15 Governance and the Efficiency of Economic Systems 35, Free University of Berlin, Humboldt University of Berlin, University of Bonn, University of Mannheim, University of Munich.
    11. repec:spr:scient:v:88:y:2011:i:1:d:10.1007_s11192-011-0344-7 is not listed on IDEAS
    12. Shastitko. Andrey & Komkova, Anastasia Andreevna & Kurdin, Alexander & Shastitko, Anastasia, 2016. "Competition Policy and Incentives for Innovation," Working Papers 1447, Russian Presidential Academy of National Economy and Public Administration.
    13. Clarke, George R. G., 2005. "Do government policies that promote competition encourage or discourage new product and process development in low and middle-income countries?," Policy Research Working Paper Series 3471, The World Bank.
    14. Kemppainen, Kari, 2003. "Competition and regulation in European retail payment systems," Research Discussion Papers 16/2003, Bank of Finland.
    15. René Belderbos & Leo Sleuwaegen & Reinhilde Veugelers, 2010. "Market Integration and Technological Leadership in Europe," European Economy - Economic Papers 2008 - 2015 403, Directorate General Economic and Financial Affairs (DG ECFIN), European Commission.
    16. Shastitko, A. & Kurdin, A., 2014. "Protection of Intellectual Property Rights and Competition Policy: Seeking for a Better Balance," Journal of the New Economic Association, New Economic Association, vol. 21(1), pages 111-135.
    17. Goyal, Ashima, 2005. "New technology and labour Markets: Entrants, outsourcing and matching," MPRA Paper 24620, University Library of Munich, Germany.
    18. Emmanuel Duguet & Stéphanie Monjon, 2004. "Is innovation persistent at the firm Level . An econometric examination comparing the propensity score and regression methods," Cahiers de la Maison des Sciences Economiques v04075, Université Panthéon-Sorbonne (Paris 1).

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