Embracing the Knowledge Economy

Embracing the Knowledge Economy

The Dynamic Transformation of the Finnish Innovation System

New Horizons in the Economics of Innovation series

Edited by Gerd Schienstock

In an astonishingly short period of time, Finland has developed into one of the world’s leading knowledge societies whilst retaining a comprehensive welfare state. The book traces this rapid transformation from a resource-based to a knowledge-based society. The authors describe the country’s strengths and weaknesses in the new economy and demonstrate how Finland has been able to catch-up with the leading industrial countries by exploiting new techno-organizational opportunities. Experts from different fields provide rich empirical material on Finnish industries, firms, regions and institutions, and the role they have played in the transformation process. The book also details the business and economic restructuring which was required, and explores new trends in the country's science, technology and innovation policy.

Chapter 13: Regulation and innovation: Competition law

Kalle Määttä

Subjects: innovation and technology, innovation policy

Extract

Kalle Määttä 13.1 PRELIMINARY REMARKS Virtually all regulations that affect output, profitability and technological constraints also have implications for innovative activities. (See in general Metcalfe 1995.) On the other hand, the results of innovative activities have implications for regulatory policy, that is, new technological innovations often create challenges for the development of amendments to regulation. This is also the case with respect to competition law and policy. Competition law may be an obstacle for innovations as well as facilitate innovative activities. Sometimes new innovations, like those in the telecommunications sector, have created new challenges in the application of competition law. Competition policy and enforcement have traditionally focused on the prices charged and excess returns as indicators of social welfare. Such an approach has worked well in many smokestack industries, for example, when the question involves price-fixing between business firms in those industries. On the contrary, information technology industries differ from smokestack industries in that they are currently more dynamic than static. In practice, it seems that equilibrium is transitory, if it exists at all, in information technology industries. From this point of view, it is not surprising that competition policy and enforcement appear to have been difficult to implement, particularly in information technology industries (Sheremata 1998, p. 547). A critical question here is whether innovation-based competition (rather than price competition) should make competition authorities change the way competition legislation is applied or whether competition legislation as such should be modified. Because the topic is large, we will only concentrate...

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