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Segal, Ilya, and
Michael D. Whinston. 2007. "Antitrust in Innovative Industries."
,
97(5): 1703-1730.
Show Article Details
DOI: 10.1257/aer.97.5.1703
Abstract:We study the effects of antitrust policy in industries with continual innovation.
Antitrust policies that restrict incumbent behavior toward new entrants may have
conflicting effects on innovation incentives, raising the profits of new entrants, but
lowering those of continuing incumbents. We show that the direction of the net effect
can be determined by analyzing shifts in innovation benefit and supply, holding the
innovation rate fixed. We apply this framework to analyze several specific antitrust
policies. We also show that, in some cases, the tension does not arise, and policies
that protect entrants necessarily raise the rate of innovation. (JEL K21, L13, L14,
L40, O30)
Additional links:
Link to Appendix
Authors:
Segal, Ilya (Stanford University)
Whinston, Michael D. (Northwestern University)
JEL Classifications:
K21: Antitrust Law
L13: Oligopoly and Other Imperfect Markets
L14: Transactional Relationships; Contracts and Reputation; Networks
L40: Antitrust Issues and Policies: General
O30: Technological Change; Research and Development: General
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