TY  - JOUR
AU  - Evans,David S.
AU  - Schmalensee,Richard
TI  - Some Economic Aspects of Antitrust Analysis in Dynamically Competitive Industries
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 8268
PY  - 2001
Y2  - May 2001
UR  - http://www.nber.org/papers/w8268
L1  - http://www.nber.org/papers/w8268.pdf
N1  - Author contact info:
Richard Schmalensee
MIT Sloan School of Management
100 Main Street, E62-520
Cambridge, MA 02142
Tel: 617/253-2957
Fax: 617/258-6617
E-Mail: rschmal@mit.edu
M1  - published as David S. Evans, Richard Schmalensee. "Some Economic Aspects of Antitrust Analysis in Dynamically Competitive Industries," in Adam B. Jaffe, Josh Lerner and Scott Stern, editors, "Innovation Policy and the Economy, Volume 2" MIT Press (2002)

AB  - Competition in many important industries centers on investment in intellectual property. Firms engage in dynamic, Schumpeterian competition for the market, through sequential winner-take-all races to produce drastic innovations, rather than through static price/output competition in the market. Sound antitrust economic analysis of such industries requires explicit consideration of dynamic competition. Most leading firms in these dynamically competitive industries have considerable short-run market power, for instance, but ignoring their vulnerability to drastic innovation may yield misleading conclusions. Similarly, conventional tests for predation cannot discriminate between practices that increase or decrease consumer welfare in winner-take-all industries. Finally, innovation in dynamically competitive industries often involves enhancing feature sets; there is no sound economic basis for treating such enhancements as per se illegal ties.
ER  -