Antitrust regulation, innovation and industry dynamics

Shiyun Xia

The Quarterly Review of Economics and Finance, 2024, vol. 97, issue C

Abstract: This paper presents a framework for identifying the impacts of antitrust regulation on innovation and industry dynamics. I consider two inventor types: multi-product incumbent firms and startups not yet in product markets. They pursue external innovation, which results in Schumpeterian competition; and internal innovation, which incumbent firms use to refine current products in their portfolios. I find that weaker regulation gives incumbent firms greater market power to block competition, reducing incentives for external innovation, but raising incentives for internal innovation. Less heavy-handed regulation slows industry dynamics and raises industrial concentration; however, more lenient regulation may increase aggregate innovation depending on parameter value.

Keywords: Antitrust; Innovation; Industry dynamics (search for similar items in EconPapers)
JEL-codes: L40 O30 (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:eee:quaeco:v:97:y:2024:i:c:s1062976924000875

DOI: 10.1016/j.qref.2024.101881

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