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International Handbook on Industrial Policy

Edited by Patrizio Bianchi and Sandrine Labory

This timely and much-needed Handbook reconsiders an old topic from a fresh perspective, raising a number of new, interesting and worthwhile issues in the wake of ten years of globalization. This comprehensive analysis illustrates that old-style industrial policies whereby the government directly intervened in markets, and was often the producer itself, are no longer relevant. Structural changes occurring in economies – summarized in the term ‘globalization’ – are triggering the definition and implementation of new industrial policies. The contributors, leading experts in their field, unite to evaluate this shift of over a decade ago.
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Chapter 6: Competition Policy and Innovation

Jochen Lorentzen and Peter Møllgaard


Jochen Lorentzen and Peter Møllgaard 1 Introduction Technological progress harbours the prospect of a future in which there would be cures for and vaccines against cruel diseases such as HIV/AIDS, cancer or malaria. People the world over would enjoy the benefits of mobility in safe, zero-emission vehicles and make use of effective, affordable communication devices for both work and play. And industry would meet the growing demand for goods and services by an increasing global population while drastically reducing its negative impact on environmental sustainability. Making this future a reality requires innovations. To bring them about, firms as the major agents of technological change must invest in new products and processes. In so doing, they face costs associated with R&D that they often cannot bear individually. They confront technical risks and uncertainties related to market acceptance and, because of the increasing complexity of new applications, they come up against limits of their internal capabilities to solve a constantly evolving set of problems single-handedly. Firms have responded to this challenge through mergers and by cooperating with each other. For example, they have formed international technology alliances, including those with universities and science institutes. These partnerships aim to share costs, pool risks and complement or enhance individual capabilities through joint R&D or technology development. At the latest count there were almost 6000 of such alliances, concentrated in the Triad economies of the USA, Europe and Japan (NSF, 2004, Table 4.16). The tally is conservative in that...

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