Understanding Dynamic Competition: New Perspectives on Potential Competition, “Monopoly,” and Market Power
Abstract
This article is an effort to further advance what has come to be known as the dynamic competition paradigm, which prioritizes innovation over efficiency and favors the dynamic over the static and the future over the present. Moreover, it recognizes that, with digitization (what some call the fourth industrial revolution), the nature of innovation itself has changed, and along with it the nature of competition. To better understand the evolving nature of competition, enforcement agencies, courts, and legislatures must develop and apply new economic models of innovation and competition. As Richard Posner observed, “Antitrust doctrine has changed more or less in tandem with changes in economic theory, albeit with a lag.” The purpose of this article is to outline a dynamic competition economic theory/paradigm that I have been endeavoring to launch for 30 years; I call it dynamic competition. As will become evident, there is not yet universal agreement on what this framework entails and how to apply it. I will elaborate on a framework that I claim is a coherent framework, one that is not selectively appealed to when it suits the enforcement agencies or analysts wishing to find a new way to support old shibboleths.
Read the full piece at SSRN.