Competitiveness, competition, and competition policy

Oliver Budzinski and Annika Stöhr

No 206, Ilmenau Economics Discussion Papers from Ilmenau University of Technology, Institute of Economics

Abstract: Since Mario Draghi's 2024 report on "The Future of European Competitiveness", identifying European (i) weaknesses in global innovation and, consequently, in global market impact, as well as (ii) regulatory overburden, the term competitiveness has been propelled into massive popularity. For instance, competitiveness has been established as a core guiding principle for the work of the European Commission (the competitiveness compass as a new roadmap for EU economic policy. But what does competitiveness exactly mean and how does it relate to competition? This contribution addresses possible concepts of competitiveness and their relationship with concepts of competition. Furthermore, we compare current narratives surrounding the competition-competitiveness interrelation with stylized academic empirical evidence. We conclude that (i) it should always be explicitly specified which notion and concept of the term competitiveness is referred to, (ii) effective competitiveness policies must be competition-based (i.e., promote competitiveness through competition), (iii) a selective firmor industry-focused competitiveness policy is likely to decrease welfare in a world where lobbyism, rent-seeking, and imperfect political incentives are prevalent, (iv) narratives that we have experienced a specifically competition-centric era during the last decades are not supported by scientific findings, and (v) competition policy and merger control should be reinvigorated to promote public interest goals such as social welfare and economic resilience.

Keywords: competitiveness; competition; antitrust; industrial policy; resilience; lobbyism; locational competition; innovation; rent-seeking (search for similar items in EconPapers)
JEL-codes: F13 K21 L40 L50 L52 (search for similar items in EconPapers)
Date: 2025
New Economics Papers: this item is included in nep-com, nep-eec, nep-law and nep-reg
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