Antitrust in Innovative Industries: the Optimal Legal Standards

Giovanni Immordino and Michele Polo

No 434, Working Papers from IGIER (Innocenzo Gasparini Institute for Economic Research), Bocconi University

Abstract: We study the interaction between a ?rm that invests in research and, if successful, undertakes a practice to exploit the innovation, and an enforcer that sets legal standards, ?nes and accuracy. In innovative industries deterrence on actions interacts with deterrence on research. A per-se legality rule prevails when the practice increases expected welfare, moving to a discriminating rule combined with type-I accuracy for higher probabilities of social harm. Moreover, discriminating rules should be adopted more frequently in traditional industries than in innovative environments; patent and antitrust policies are substitutes; additional room for per-se (illegality) rules emerges when ?nes are bounded. Keywords: legal standards, accuracy, antitrust, innovative activity, enforcement. JEL classi?cation: D73, K21, K42, L51.

Date: 2012
New Economics Papers: this item is included in nep-com, nep-ino, nep-ipr and nep-pr~
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