What Competition Scholars Should Know About the 2025 Economics Nobel
The 2025 Economics Nobel went to Joel Mokyr, Philippe Aghion, and Peter Howitt for exploring innovation-driven economic growth. I already wrote a general explainer about the prize.
Here I want to make a different claim: If you work in antitrust, you should pay particular attention to their scholarship. Their work, especially that of Aghion and Howitt, fundamentally changes how we think about competition in markets.
The standard antitrust framework inherited from 1960s industrial organization focuses on market structure. Count the firms. Measure concentration. Assume that structure determines conduct, which determines performance. More firms mean more competition, which means lower prices and better outcomes. The U.S. Merger Guidelines embody this view with their use of Herfindahl–Hirschman index (HHI) thresholds.
The Aghion-Howitt framework tells a different story. Competition is a process of innovation and displacement. Firms compete by trying to make better products, not just by cutting prices on existing ones. What matters is not the number of firms at any point in time, but whether new innovators can challenge incumbents. Market structure is an outcome of this competitive process, not just a cause of competitive behavior.
Let me walk through what Aghion and Howitt’s work actually says and what it means for how we think about competition policy.