Template-Type: ReDIF-Paper 1.0
Series: Tinbergen Institute Discussion Papers
Creation-Date: 2000-02-14
Number: 00-010/2
Author-Name: Stephen Martin
Author-Email: smart@fee.uva.nl
Author-Workplace-Name: University of Amsterdam
Title: Competition Policy for High Technology Industries
Abstract: I model optimal product-market competition policy when industriesdiffer inthe potential for quality-improving technological advance. In a two-periodmodel, a competition authority with limited resources administers adeterrence-based competition policy toward two industries. In one oftheindustries, an incumbent firm chooses the level of resources toinvest in aquality-improving R&D project. In the other industry, product qualityisconstant. The competition authority cannot commit in advance to thetoughness of competition policy in the post-discovery world. Optimalpolicy requires the competition authority to administer a toughercompetition policy before innovation, all else equal, the greater thepotential quality improvement; patent protection may increase R&Dintensity, but worsens market performance.
File-Url: https://papers.tinbergen.nl/00010.pdf
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Handle: RePEc:tin:wpaper:20000010