Antitrust, Innovation, and Competitiveness

By Thomas M. Jorde; David J. Teece | Go to book overview

Preface

This book had its origins in a conference that we organized in Berkeley in November 1988. 1 We saw the centennial year of the Sherman Act looming before us. We also saw an active debate on U.S. competitiveness, spurred by lackluster U.S. productivity growth (Table P-1). But the connections between competition policy and concern over U.S. competitiveness were rarely investigated. Here was an opportunity to bring together leading figures in the field and to discuss how competition policy might be linked to U.S. competitiveness.

We did this against a backdrop of recent profound changes in U.S. antitrust law and policy. Efficiencies were being recognized; some progress was being made toward taking global competition into account; and courts were showing greater sophistication concerning market power and its measurement. Most antitrust scholars and lawyers seemed satisfied with these changes.

Yet, we had a sense of unease because antitrust law was not connected to trade policy or to innovation policy. Despite its focus on competition, antitrust did not seem to have much to say about "competitiveness." Americans were confronted by a paradox: their country was long on competition and short on competitiveness. Our concerns were shared by the President's Commission on Industrial Competitiveness, which specifically appealed for new "antitrust law to reflect the new global markets within which American firms operate." 2

What was striking to us was that antitrust, despite the revolution that it had just come through, did not really have the conceptual apparatus--or even the vocabulary--to deal with many of the new questions emerging in the global economy. In particular, U.S. antitrust policy did not seem to recognize how seminal innovation was to competition and to the U.S. standard of living.

The explanation for this state of affairs appeared to us to be relatively clear. The economic theory that the Chicago School had used to modify antitrust analysis effectively was almost bereft of reference to innovation. It seemed to us that the static microanalysis embedded in antitrust economics, as it had emerged by the late 1980s, did not provide an adequate framework for analyzing the contemporary business environment. Judicial and policy errors could therefore be expected to continue--both in terms of being too permissive in some circumstances and not sufficiently restrictive in others--despite the important progress that had been made.

We saw the Sherman Act centennial as an opportunity to needle our colleagues about these matters. Most took our challenge in the right spirit. Others did not. Some antitrust scholars, having just been forced to revamp their intellectual tool kits to deal with Chicago, did not seem at all enthusiastic about revamp

-vii-

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Antitrust, Innovation, and Competitiveness
Table of contents

Table of contents

  • Title Page iii
  • Preface vii
  • Notes viii
  • Contents ix
  • Contributors xi
  • 1 - Introduction 3
  • Notes 25
  • References 27
  • 2 - Antitrust Law as Industrial Policy: Should Judges and Juries Make It? 29
  • Notes 45
  • 3 - Innovation, Cooperation, and Antitrust 47
  • Notes 63
  • References 68
  • Appendix: National Cooperative Research and Commercialization Act (ncrca) 71
  • 4 - Antitrust: Source of Dynamic and Static Inefficiencies? 82
  • Notes 95
  • References 96
  • 5 - Agreements Between Competitors 98
  • Notes 114
  • 6 - Ignorance and Antithrust 119
  • Notes 132
  • 7 - Antitrust Lenses and the Uses of Transaction Cost Economics Reasoning 137
  • Notes 158
  • References 161
  • 8 - Monopoly Conduct, Especially Leveraging Power from One Product or Market to Another 165
  • 9 - Market Structure and Technical Advance: The Role of Patent Scope Decisions 185
  • Notes 219
  • 10 - Conclusion 233
  • Index 235
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