Industrial Policy and Competition Law

Jihwan Joo and Hong Lee
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Jihwan Joo: Korea Institute for Industrial Economics and Trade
Hong Lee: Korea Institute for Industrial Economics and Trade

Industrial Economic Review from Korea Institute for Industrial Economics and Trade

Abstract: This paper examines the relationship between industrial policy and competition law, which has traditionally been viewed as a fundamental trade-off between promoting national champions and preserving market competition. Rather than treating the two as opposing instruments, we propose a three-tier analytical framework that distinguishes (i) the policy instruments deployed, (ii) the market structures these instruments produce, and (iii) the time horizon over which welfare effects unfold.

Applying this framework to Japan, China, and South Korea, we find that the apparent conflict between the two policy domains often dissolves when policy effects are evaluated in context of instrument design and time horizon. Japan’s recalibration toward competition after the 1980s, China’s bifurcated approach across strategic and consumer-facing sectors, and Korea’s persistent oligopolistic legacy each illustrate distinct equilibria along these tiers. We argue that the East Asian record suggests that industrial policy and competition law produce different welfare profiles depending not on whether they coexist, but on how their instruments interact with market structure over time.

Keywords: industrial policy; competition law; competition policy; market structure; South Korea; China; Japan (search for similar items in EconPapers)
JEL-codes: K21 L11 L40 L41 L52 O25 (search for similar items in EconPapers)
Date: 2026-06-30
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Published in KIET Industrial Economic Review Vol. 31, No. 3

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Persistent link: https://EconPapers.repec.org/RePEc:ris:kieter:023558

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