Industry-Specific Antitrust Policy for Innovation

15 Pages Posted: 1 Sep 2010

Date Written: September 1, 2010


The premise that IP promotes dynamic efficiency while antitrust concentrates on static welfare is wrong, or at least oversimplified. It proceeds from a fundamentally Schumpeterian assumption that competition will not lead to innovation, and we need the lure of monopoly to drive investment in new products. In fact, however there is substantial economic evidence suggesting that competition itself may act as a greater spur to innovation than monopoly. Critically, different market structures will promote innovation in different industries. Sometimes - as in the pharmaceutical industry - we need the incentive provided by strong patents, but in other industries - like the Internet - competition is more likely to spur innovation. Both patent and antitrust law need to take these industry differences into account. And to do so, antitrust will need to shed its subservience to IP law.

Keywords: Intellectual Property, Patent, Innovation, Antitrust, Schumpeter

Suggested Citation

Lemley, Mark A., Industry-Specific Antitrust Policy for Innovation (September 1, 2010). Stanford Law and Economics Olin Working Paper No. 397. Available at SSRN: or

Mark A. Lemley (Contact Author)

Stanford Law School ( email )

559 Nathan Abbott Way
Stanford, CA 94305-8610
United States

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