The Role of Market Power in Economic Growth: An Analysis of the Differences between EU and US Competition Policy Theory, Practice and Outcomes

European Journal of Government and Economics Volume 5, Number 1 (June 2016) ISSN: 2254-7088.

24 Pages Posted: 9 Nov 2016

Date Written: June 2016

Abstract

The European Union has experienced relatively weak economic performance over the past fifteen years, notably compared to the U.S. In order to restore investment, innovation, and therefore growth, the European Commission seeks to raise the level of static competition in all markets. The Commission’s economic policy is largely determined by its competition policy. This policy is derived from its doctrine on competition law, which regards the exercise of market power as a source of inefficiency and advocates that its effects should be banned. By contrast, the U.S. competition authorities, under the influence of the Chicago School, consider that market power is a necessary incentive to invest and a fair return on investment. Recent findings in economic growth theory, which state that increased competition intensity may harm endogenous innovation, provide a theoretical basis to support the U.S. approach and call for a review of European doctrine.

Keywords: antitrust; competition; endogenous growth; innovation; market power; market structure

JEL Classification: L10; L40; O30; O40

Suggested Citation

Ciriani, Stephane and Lebourges, Marc, The Role of Market Power in Economic Growth: An Analysis of the Differences between EU and US Competition Policy Theory, Practice and Outcomes (June 2016). European Journal of Government and Economics Volume 5, Number 1 (June 2016) ISSN: 2254-7088. , Available at SSRN: https://ssrn.com/abstract=2866888

Stephane Ciriani (Contact Author)

Orange ( email )

78, rue Olivier de Serres
Paris Cedex 15, 75505
France

Marc Lebourges

France Telecom ( email )

France

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