Exclusionary Conduct of Dominant Firms, R&D Competition, and Innovation

Exclusionary Conduct of Dominant Firms, R&D Competition, and Innovation This article evaluates the innovation consequences of antitrust enforcement against the exclusionary conduct of dominant firms through a Nash equilibrium model of research and development (R&D) competition to create new products. In the two-firm model, whether one firm regards the other’s R&D investment as a strategic complement or substitute turns on an increasing differences condition: whether the first firm’s incremental benefit of increased R&D investment is greater if its rival’s R&D effort succeeds or fails. Antitrust prohibitions on pre-innovation product market exclusion, post-innovation product market exclusion, and exclusion from R&D competition, are found to be effective in different strategic settings. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Review of Industrial Organization Springer Journals

Exclusionary Conduct of Dominant Firms, R&D Competition, and Innovation

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Publisher
Springer US
Copyright
Copyright © 2015 by The Author(s)
Subject
Economics; Industrial Organization; Microeconomics
ISSN
0889-938X
eISSN
1573-7160
D.O.I.
10.1007/s11151-015-9485-9
Publisher site
See Article on Publisher Site

Abstract

This article evaluates the innovation consequences of antitrust enforcement against the exclusionary conduct of dominant firms through a Nash equilibrium model of research and development (R&D) competition to create new products. In the two-firm model, whether one firm regards the other’s R&D investment as a strategic complement or substitute turns on an increasing differences condition: whether the first firm’s incremental benefit of increased R&D investment is greater if its rival’s R&D effort succeeds or fails. Antitrust prohibitions on pre-innovation product market exclusion, post-innovation product market exclusion, and exclusion from R&D competition, are found to be effective in different strategic settings.

Journal

Review of Industrial OrganizationSpringer Journals

Published: Sep 11, 2015

References

  • Antitrust in innovative industries
    Segal, I; Whinston, M

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