TY  - JOUR
AU  - Segal,Ilya
AU  - Whinston,Michael
TI  - Antitrust in Innovative Industries
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 11525
PY  - 2005
Y2  - August 2005
UR  - http://www.nber.org/papers/w11525
L1  - http://www.nber.org/papers/w11525.pdf
N1  - Author contact info:
Ilya Segal
Stanford University
Department of Economics
Stanford, CA 94305-6072
E-Mail: ilya.segal@stanford.edu

Michael D. Whinston
Department of Economics
Northwestern University
2003 Sheridan Road
Evanston, IL  60202
Tel: 847/491-8260
Fax: 847/491-7001
E-Mail: mwhinston@northwestern.edu
M2  - featured in NBER digest on 2005-08-01
AB  - We study the effects of antitrust policy in industries with continual innovation. A more protective antitrust policy may have conflicting effects on innovation incentives, raising the profits of new entrants, but lowering those of continuing incumbents. We show that the direction of the net effect can be determined by analyzing shifts in innovation benefit and supply holding the innovation rate fixed. We apply this framework to analyze several specific antitrust policies. We show that in some cases, holding the innovation rate fixed, as suggested by our comparative statics results, the tension does not arise and a more protective policy necessarily raises the rate of innovation.
ER  -