Joint Research and Development under US Antitrust and EU Competition Law

Joint Research and Development under US Antitrust and EU Competition Law

New Horizons in Competition Law and Economics series

Björn Lundqvist

This fascinating new book dissects, from a Competition law perspective, how Research and Development collaborations operate under both US and EU antitrust law. Analyzing the evolution of this innovation landscape from the 1970s to the present day, Blomqvist details the modifications and amendments made over this time to the relevant legal acts and guidelines. In doing to, the author picks up on the slow shift that has taken place in both the antitrust laws of the USA and the Competition Rules of the EU. The book concludes by discussing the necessity for a stringent attitude towards the antitrust establishment, and how this can be developed by reviving the concept of the ‘innovation market’.

Chapter 2: Innovation economics

Björn Lundqvist

Subjects: economics and finance, competition policy, law - academic, competition and antitrust law


Greatest prosperity is created by the daily development of new and improved products and services, and not by daily competition to pursue efficiencies for the production and sale of the cheapest products. Even though it is somewhat obvious, innovation as a process is based on the method of ‘trial and error’, with often several errors before a short period of success. There seems to be a general consensus between the economists of today’s new economy and the philosophers of yesterday’s ‘old economy’ that unfettered innovation far exceeds the potential gain of making markets more competitive by driving prices closer to marginal costs. Notwithstanding the consensus on this point, the US and EU policies in the field of research and development may provocatively be purported to be an experiment in Schumpeterian theory that monopolies create more innovations than systems governed by competition or rivalry. It seems that the legislators in the USA and the EU (supported by both lawyers and economists) purport that firms with market power and the non-intervention of antitrust courts and agencies spur the rate of innovation. Hence, there is a very lax attitude towards regulating competition or rivalry when dealing with joint R & D collaborations. It is ‘the later’ Schumpeter, displayed in Capitalism, Socialism, and Democracy, that has had a profound impact on the current state of mind. Schumpeter conceived technological progress as emanating from the large industrial research laboratories.

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