Dynamic Competition And Technical Progress

The concept of localized technological change is emerging at the crossroads of different approaches to the economics of innovation and new technologies. The term `localized technological change' refers to the introduction of technological changes which make possible an increase in total factor productivity within only a limited range of techniques defined by the levels of factor intensity. This contrasts with `generalized technological change', which is defined as the global shift of all the techniques represented on the map of isoquants of the neoclassical tradition. The Economics of Localized Technological Change elaborates the notion of localized technology with respect to firms, factor substitution, sectors, regions and techniques. It also assesses the implications for industrial policy, technology and innovation policy. The book will be of interest to corporate policy makers, scholars of industrial organization and economics of innovation as well as business school students.

These contributions discuss a number of important developments over the past decade in a newly established and important field of economics that have led to notable changes in views on governmental competition policies. They focus on the nature and role of competition and other determinants of market structures, such as numbers of firms and barriers to entry; other factors which determine the effective degree of competition in the market; the influence of major firms (especially when these pursue objectives other than profit maximization); and decentralization and coordination under control relationships other than markets and hierarchies.ContributorsJoseph E. Stiglitz, G. C. Archibald, B. C. Eaton, R. G. Lipsey, David Enaoua, Paul Geroski, Alexis Jacquemin, Richard J. Gilbert, Reinhard Selten, Oliver E. Williamson, Jerry R. Green, G. Frank Mathewson, R. A. Winter, C. d'Aspremont, J. Jaskold Gabszewicz, Steven Salop, Branko Horvat, Z. Roman, W. J. Baumol, J. C. Panzar, R. D. Willig, Richard Schmalensee, Richard Nelson, Michael Scence, and Partha Dasgupta

During the 1990s, U.S. antitrust policy began to take greater account of economic theories that emphasize the critical role of innovation and change in the competitive process. Several high-profile antitrust cases have focused on dynamic innovation issues as much as or more than static economic efficiency. But does dynamic competition furnish a new rationale for activist antitrust, or a new reason for government to leave markets alone? In this volume, a dozen leading scholars with extensive antitrust experience explore this question in the context of the Microsoft case, merger policy, and intellectual property law.

Some structural elements of networks carry over to features of dynamic competition in network industries that, through increasing return mechanisms on innovation based industries, generate sustainable growth and create industrial linkages as a backbone to industrial/economic growth. The project focuses on the integration of network structure, industrial competition and industrial growth processes into a coherent mechanism design. This text should be of interest to policy analysts/makers, industry strategists/consultants, students of industrial economics/organisation, entrepreneurship/ management and economic journalists alike with interest in and focus on strategic and structural foundations of network economies and their industrial implications. The book is also designed to be used as a text for a course in business strategy as it could serve as a supplementary text to industrial organisation and being part of the micro-foundations of economic growth and development neglected in the mostly macro-centered economic growth literature. Content-wise, links are drawn from the structure of networks to dynamic competition in innovation focused industries, its restrictions and abuses of dominance in market structures and potential future markets for antitrust, to the growth of industries through increasing returns mechanisms in complementary markets and the consequences for industrial growth and development. Coverage includes: 1. Integrating Networks, Dynamic Competition and Industrial Growth, 2. Networks, Technology and Competition, 3. Dynamics of Competition and Market Dynamics, 4. Increasing Returns Mechanism , 5.Industrial and Economic Growth: A Review, 6. Mechanism Design for Economic Development, and 7. Network-centered Industrial Growth. The central theme of this compilation is the interplay of competition, innovation, cooperation and market structure along vertical and horizontal industry lines. Interaction and interdependencies are facilitated and sometimes bottlenecked through networks most naturally prevalent in high technology industries. This forms the core basis of business strategy relating to the growth of business and complementary activities through innovation, mergers and acquisitions (M&As) and related strategic choices.

This book contains the most sustained and serious attack on mainstream, neoclassical economics in more than forty years. Nelson and Winter focus their critique on the basic question of how firms and industries change overtime. They marshal significant objections to the fundamental neoclassical assumptions of profit maximization and market equilibrium, which they find ineffective in the analysis of technological innovation and the dynamics of competition among firms. To replace these assumptions, they borrow from biology the concept of natural selection to construct a precise and detailed evolutionary theory of business behavior. They grant that films are motivated by profit and engage in search for ways of improving profits, but they do not consider them to be profit maximizing. Likewise, they emphasize the tendency for the more profitable firms to drive the less profitable ones out of business, but they do not focus their analysis on hypothetical states of industry equilibrium. The results of their new paradigm and analytical framework are impressive. Not only have they been able to develop more coherent and powerful models of competitive firm dynamics under conditions of growth and technological change, but their approach is compatible with findings in psychology and other social sciences. Finally, their work has important implications for welfare economics and for government policy toward industry.

The regulation of innovation and the optimal design of legal institutions in an environment of uncertainty are two of the most important policy challenges of the twenty-first century. Innovation is critical to economic growth. Regulatory design decisions, and, in particular, competition policy and intellectual property regimes, can have profound consequences for economic growth. However, remarkably little is known about the relationship between innovation, competition, and regulatory policy. Any legal regime must attempt to assess the tradeoffs associated with rules that will affect incentives to innovate, allocative efficiency, competition, and freedom of economic actors to commercialize the fruits of their innovative labors. The essays in this book approach this critical set of problems from an economic perspective, relying on the tools of microeconomics, quantitative analysis, and comparative institutional analysis to explore and begin to provide answers to the myriad challenges facing policymakers.

On the occasion of the fiftieth anniversary of the Postal Payments System, the former Director General of the Dutch Post Office asked Professor Heertje to write a book on Economics and Technical Development, and this is the English translation of the original Dutch text. This is basically a non-mathematical book on the subject, which deals with the history of economic thought on technical development, the history of technology, production theories and the significance of technical development for economic growth, monopoly power, and economic policy. Informed by the author's knowledge of the original literature, and his proficiency in its five languages, the terminology is exact, the exposition is clear, this text should bridge English-speaking and Continental European thought on this subject.