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What’s the aim for competition policy: optimizing market structure or encouraging innovative behaviors?

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  • Jean-Luc Gaffard
  • Michel Quéré

Abstract

Innovation is usually thought of as a change in the fundamentals of an economy, which can require adjustments by policy-makers. The latter are usually thought as in regard to a dominant vision, which is to restore an optimal market structure, and leads to a competition policy mainly aimed at controlling for antitrust practices and limiting market power. In this paper, we favor another vision of innovation, as a discovery process that cannot allow ex ante a definition of best practices. Dealing with information issues in two different and alternative perspectives, we argue that antitrust authorities confront a market imperfection–market failure dilemma (MI–MF dilemma) which leads them to favor the existence of appreciative and discretionary policy rather than encouraging the existence of any market structure thought of as optimal as regards the current state of information. We conclude with policy implications, contrasting the EU with the US.
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  • Jean-Luc Gaffard & Michel Quéré, 2006. "What’s the aim for competition policy: optimizing market structure or encouraging innovative behaviors?," Journal of Evolutionary Economics, Springer, vol. 16(1), pages 175-187, April.
    • Handle: RePEc:spr:joevec:v:16:y:2006:i:1:p:175-187
    DOI: 10.1007/s00191-005-0014-0
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    6. Reinganum, Jennifer F., 1989. "The timing of innovation: Research, development, and diffusion," Handbook of Industrial Organization, in: R. Schmalensee & R. Willig (ed.), Handbook of Industrial Organization, edition 1, volume 1, chapter 14, pages 849-908, Elsevier.
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    Cited by:

    1. Afonso Planas Raposo de Almeida Costa & Pedro Barros, 2012. "Does a Tougher Competition Policy Reduce or Promote Investment?," Journal of Industry, Competition and Trade, Springer, vol. 12(1), pages 119-141, March.
    2. Patrice Bougette & Frédéric Marty, 2020. "Information Exchange among Firms: The Coherence of Justice Brandeis' Regulated Competition Approach," GREDEG Working Papers 2020-56, Groupe de REcherche en Droit, Economie, Gestion (GREDEG CNRS), Université Côte d'Azur, France, revised Feb 2021.
    3. Frédéric Marty & Thierry Warin, 2020. "Keystone Players and Complementors: An Innovation Perspective," Working Papers hal-03029748, HAL.
    4. Frédéric Marty, 2020. "Protecting the Competitive Process, not a Competitive Structure - Reflections on the book by Nicolas Petit Big Tech and the Digital Economy," GREDEG Working Papers 2020-51, Groupe de REcherche en Droit, Economie, Gestion (GREDEG CNRS), Université Côte d'Azur, France.
    5. Thierry Kirat & Frédéric Marty, 2020. "From the First World War to the National Recovery Administration (1917-1935) - The Case for Regulated Competition in the United States during the Interwar Period," Working Papers halshs-03052417, HAL.
    6. Stojanović Boban & Kostić Zorana & Vučić Vladan, 2021. "Alignment with EU Regulations in the Field of the Competition Policy and System of State Aid in Western Balkan Countries," Economic Themes, Sciendo, vol. 59(2), pages 173-191, June.
    7. Marc Deschamps, 2013. "Pourquoi des politiques de concurrence ?," GREDEG Working Papers 2013-23, Groupe de REcherche en Droit, Economie, Gestion (GREDEG CNRS), Université Côte d'Azur, France.
    8. Jean-Luc Gaffard, 2022. "Instabilité et résilience des économies de marché: Essai sur l'économie du libéralisme social," GREDEG Working Papers 2022-33, Groupe de REcherche en Droit, Economie, Gestion (GREDEG CNRS), Université Côte d'Azur, France.
    9. Pu-Yan Nie, 2012. "Maintenance Commitments for Monopolized Goods," Prague Economic Papers, Prague University of Economics and Business, vol. 2012(1), pages 18-29.
    10. Patrice Bougette & Axel Gautier & Frédéric Marty, 2021. "Which access to which assets for an effective liberalization of the railway sector?," Competition and Regulation in Network Industries, , vol. 22(2), pages 87-110, June.
    11. Oliver Budzinski, 2009. "Modern Industrial Economics and Competition Policy: Open Problems and Possible Limits," Working Papers 93/09, University of Southern Denmark, Department of Sociology, Environmental and Business Economics.
    12. Thierry Kirat & Frédéric Marty, 2021. "De la Grande Guerre à la National Recovery Administration (1917-1935). Les arguments en faveur d’une concurrence régulée dans les États-Unis de l’entre-deux-guerres," Revue de l'OFCE, Presses de Sciences-Po, vol. 0(1), pages 239-275.
    13. Nie, Pu-yan & Wang, Chan & Yang, Yong-cong, 2019. "Vertical integration maintenance commitments," Journal of Retailing and Consumer Services, Elsevier, vol. 47(C), pages 11-16.
    14. Nie, Pu-yan, 2009. "Commitment for storable goods under vertical integration," Economic Modelling, Elsevier, vol. 26(2), pages 414-417, March.

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    More about this item

    Keywords

    Competition; Information; Innovation; L2; L4; L5; O3;
    All these keywords.

    JEL classification:

    • L2 - Industrial Organization - - Firm Objectives, Organization, and Behavior
    • L4 - Industrial Organization - - Antitrust Issues and Policies
    • L5 - Industrial Organization - - Regulation and Industrial Policy
    • O3 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights

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