IDEAS home Printed from https://ideas.repec.org/a/egr/ejge00/v5i1p5-28.html
   My bibliography  Save this article

The role of market power in economic growth: an analysis of the differences between EU and US competition policy theory, practice and outcomes

Author

Listed:
  • Stephane Ciriani

    (Orange)

  • Marc Lebourges

    (Orange)

Abstract

The European Union has experienced weak economic performance over the past 15 years, compared to the United States. In order to restore investment, innovation, and therefore growth, the European Commission seeks to raise the level of static competition in all markets. The Commission’s economic policy is largely determined by its competition policy. This policy is derived from its doctrine on competition law, which regards the exercise of market power as a source of inefficiency and advocates that its effects should be banned. By contrast, the United States competition authorities, under the influence of the Chicago School, consider that market power is a necessary incentive to invest and a fair return on investment. Recent findings in economic growth theory, which state that increased competition intensity may harm endogenous innovation, provide a theoretical basis to support the United States approach and call for a review of European doctrine.

Suggested Citation

  • Stephane Ciriani & Marc Lebourges, 2016. "The role of market power in economic growth: an analysis of the differences between EU and US competition policy theory, practice and outcomes," European Journal of Government and Economics, Europa Grande, vol. 5(1), pages 5-28, June.
    • Handle: RePEc:egr:ejge00:v:5:i:1:p:5-28
    as

    Download full text from publisher

    File URL: http://www.ejge.org/index.php/ejge/article/download/82/61
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Romer, Paul M, 1986. "Increasing Returns and Long-run Growth," Journal of Political Economy, University of Chicago Press, vol. 94(5), pages 1002-1037, October.
    2. Philippe Aghion & Nick Bloom & Richard Blundell & Rachel Griffith & Peter Howitt, 2005. "Competition and Innovation: an Inverted-U Relationship," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 120(2), pages 701-728.
    3. Frédéric Marty & Julien Pillot, 2011. "Pratiques de boycott ou refus d'accès à une facilité essentielle ? De Terminal Railroad à l'IRM d'Arcachon," SciencePo Working papers Main hal-00614944, HAL.
    4. Houngbonon, Georges Vivien & Jeanjean, Francois, 2014. "Is there a level of competition intensity that maximizes investment in the mobile telecommunications industry?," 25th European Regional ITS Conference, Brussels 2014 101384, International Telecommunications Society (ITS).
    5. Paul Belleflamme & Cecilia Vergari, 2011. "Incentives To Innovate In Oligopolies," Manchester School, University of Manchester, vol. 79(1), pages 6-28, January.
    6. Robert M. Solow, 1956. "A Contribution to the Theory of Economic Growth," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 70(1), pages 65-94.
    7. Tobin, James, 1969. "A General Equilibrium Approach to Monetary Theory," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 1(1), pages 15-29, February.
    8. Frédéric Marty & Julien Pillot, 2010. "Divergences transatlantiques en matière d'application de la théorie des facilités essentielles aux actifs immatériels," Revue d'économie industrielle, De Boeck Université, vol. 0(1), pages 277-300.
    9. Askenazy, P. & Cahn, C. & Irac, D., 2008. "Competition, R&D, and the Cost of Innovation," Working papers 197, Banque de France.
    10. Ivaldi, Marc & McCullough, Gerard, 2005. "Welfare Trade-Offs in US Rail Mergers," CEPR Discussion Papers 5000, C.E.P.R. Discussion Papers.
    11. Romer, Paul M, 1990. "Endogenous Technological Change," Journal of Political Economy, University of Chicago Press, vol. 98(5), pages 71-102, October.
    12. Diego A. Comin & Marti Mestieri, 2010. "The Intensive Margin of Technology Adoption," Harvard Business School Working Papers 11-026, Harvard Business School.
    13. Schmutzler, Armin, 2013. "Competition and investment — A unified approach," International Journal of Industrial Organization, Elsevier, vol. 31(5), pages 477-487.
    14. Jean-Baptiste Herbet, 2001. "Peut-on expliquer l'investissement à partir de ses déterminants traditionnels au cours de la décennie 90 ?," Économie et Statistique, Programme National Persée, vol. 341(1), pages 85-106.
    15. Bart van Ark & Mary O'Mahoney & Marcel P. Timmer, 2008. "The Productivity Gap between Europe and the United States: Trends and Causes," Journal of Economic Perspectives, American Economic Association, vol. 22(1), pages 25-44, Winter.
    16. Gilbert CETTE, 2015. "Which Role for ICTs as a Productivity Driver Over the Last Years and the Next Future?," Communications & Strategies, IDATE, Com&Strat dept., vol. 1(100), pages 65-83, 4th quart.
    17. Frédéric Marty & Julien Pillot, 2009. "Les politiques de concurrence européenne et américaine face aux remises de fidélité accordées par une entreprise dominante : L’affaire Intel," Documents de Travail de l'OFCE 2009-26, Observatoire Francais des Conjonctures Economiques (OFCE).
    18. Sacco, Dario & Schmutzler, Armin, 2011. "Is there a U-shaped relation between competition and investment?," International Journal of Industrial Organization, Elsevier, vol. 29(1), pages 65-73, January.
    19. Paul M. Romer, 1994. "The Origins of Endogenous Growth," Journal of Economic Perspectives, American Economic Association, vol. 8(1), pages 3-22, Winter.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. repec:lje:journl:v:24:y:2019:i:2:p:115-148 is not listed on IDEAS
    2. Stéphane Ciriani & François Jeanjean, 2022. "Competition, technological change and productivity gains: a European sectoral analysis," Economics Bulletin, AccessEcon, vol. 42(2), pages 927-946.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Gros, Daniel & Alcidi, Cinzia, 2014. "The Global Economy in 2030: Trends and Strategies for Europe," CEPS Papers 9142, Centre for European Policy Studies.
    2. Asongu, Simplice & Boateng, Agyenim & Akamavi, Raphael, 2016. "Mobile Phone Innovation and Inclusive Human Development: Evidence from Sub-Saharan Africa," MPRA Paper 75046, University Library of Munich, Germany.
    3. Schilirò, Daniele, 2006. "Crescita economica, conoscenza e capitale umano. Le teorie e i modelli di crescita endogena di Paul Romer e Robert Lucas [Economic growth, knowledge and human capital. Theories and models of endoge," MPRA Paper 52435, University Library of Munich, Germany.
    4. Neven Vidakovic & Iva Mesi?, 2011. "Radna snaga i perspektive ekonomskoga oporavka u Republici Hrvatskoj," Ekonomija Economics, Rifin d.o.o., vol. 18(2), pages 279-312.
    5. Durlauf, Steven N. & Quah, Danny T., 1999. "The new empirics of economic growth," Handbook of Macroeconomics, in: J. B. Taylor & M. Woodford (ed.), Handbook of Macroeconomics, edition 1, volume 1, chapter 4, pages 235-308, Elsevier.
    6. Taylor, Alan M., 1999. "Sources of convergence in the late nineteenth century," European Economic Review, Elsevier, vol. 43(9), pages 1621-1645, October.
    7. Johannes W. Fedderke & Yang Liu, 2017. "Schumpeterian and semi-endogenous productivity growth explanations," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 25(1), pages 111-137, January.
    8. Damir Novotny, 2011. "Promjena paradigme u vo?enju ekonomske politike i strukturne promjene kao temeljne pretpostavke održivog rasta hrvatskog gospodarstva," Ekonomija Economics, Rifin d.o.o., vol. 18(2), pages 313-328.
    9. Lili Kang & Fei Peng, 2018. "Economic Reform and Productivity Convergence in China," Arthaniti: Journal of Economic Theory and Practice, , vol. 17(1), pages 50-82, June.
    10. Iritié, B. G. Jean-Jacques, 2014. "Enjeux des politiques industrielles basées sur les clusters d'innovation: cas des pôles de compétitivité [Issues of Innovative Clusters-based Industrial Policy: Case of Pole of Competitiveness]," MPRA Paper 54429, University Library of Munich, Germany.
    11. Jensen Christian, 2014. "Replication and Returns to Scale in Production," The B.E. Journal of Theoretical Economics, De Gruyter, vol. 14(1), pages 1-22, February.
    12. Cameron Hepburn & Alex Bowen, 2013. "Prosperity with growth: economic growth, climate change and environmental limits," Chapters, in: Roger Fouquet (ed.), Handbook on Energy and Climate Change, chapter 29, pages 617-638, Edward Elgar Publishing.
    13. Ilkhom SHARIPOV, 2016. "ECONOMIC GROWTH IN THE EU’S EaP COUNTRIES: DETERMINANTS AND PROSPECTS," EURINT, Centre for European Studies, Alexandru Ioan Cuza University, vol. 3, pages 169-187.
    14. Dragan Tomaševi?, 2011. "Reindustrijalizacija Hrvatske - koji su preduvjeti zaokreta od potrošnog prema proizvodnom gospodarstvu, a da je zaokret i izvediv?," Ekonomija Economics, Rifin d.o.o., vol. 18(2), pages 365-376.
    15. Kenneth Button, 2011. "The Economist’s Perspective on Regional Endogenous Development," Chapters, in: Robert Stimson & Roger R. Stough & Peter Nijkamp (ed.), Endogenous Regional Development, chapter 2, Edward Elgar Publishing.
    16. Voosholz, Frauke, 2014. "A survey on modeling economic growth. With special interest on natural resource use," CAWM Discussion Papers 69, University of Münster, Münster Center for Economic Policy (MEP).
    17. Ivan Milenkovi? & Milenko Popovi?, 2011. "Politika deviznog kursa i stopa rasta u zemljama jugoisto?ne Evrope (na primerima Srbije i Hrvatske)," Ekonomija Economics, Rifin d.o.o., vol. 18(2), pages 487-526.
    18. Milenko Popovic, 2006. "Capital Augmenting And Labor Augmenting Approach In Measuring Contribution Of Human Capital And Education To Economic Growth," Montenegrin Journal of Economics, Economic Laboratory for Transition Research (ELIT), vol. 2(4), pages 71-108.
    19. Mirjam Praag & André Stel, 2013. "The more business owners, the merrier? The role of tertiary education," Small Business Economics, Springer, vol. 41(2), pages 335-357, August.
    20. Dušan Zbašnik, 2011. "Napuštanje za?aranog kruga," Ekonomija Economics, Rifin d.o.o., vol. 18(2), pages 527-535.

    More about this item

    Keywords

    antitrust; competition; endogenous growth; innovation; market power; market structure;
    All these keywords.

    JEL classification:

    • L10 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - General
    • L40 - Industrial Organization - - Antitrust Issues and Policies - - - General
    • O30 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - General
    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:egr:ejge00:v:5:i:1:p:5-28. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Europa Grande (email available below). General contact details of provider: .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.