This paper aims at studying the relationship between competition policy and economic growth in an economy with heterogeneous industries. In particular, the analysis distinguishes different types of industries – high-technology and low-technology – as well as different forms of competition policy – in the market and for the market. Then the objective is to examine the impact of various competition policies in each of these contexts.
The model predicts that a policy aimed at increasing competition for the market, through the reduction of barriers to entry, always produces a positive impact on innovation and growth, in each type of industry. On the opposite, a policy designed to improve competition in the market, by imposing the sharing of the technology invented by the leader, may generate a negative effect in high-technology industries: in fact such policy, by eliminating the expected reward due to the innovator, reduces the incentives of firms to invest in R&D and then decreases technological progress in the future.
This dynamic efficiency perspective introduces some elements of discussion about the design and the implementation of competition policy, with particular attention to the cases of abuse of dominance in high-technology industries, which involve an interaction between antitrust law and intellectual property protection.