Innovation Under Section 2 of the Sherman Act

Abstract

Antitrust cases, including recent complaints filed against dominant technology platforms, have alleged conduct that harms innovation. Section 2 of the Sherman Act is sufficiently broad to address conduct that harms innovation, but courts have little experience adjudicating such allegations. This article briefly reviews the economics literature regarding the effects of market power on innovation incentives. We identify circumstances in which structural conditions warrant a presumption that anticompetitive conduct by a dominant firm is likely to harm or promote innovation and describe various ways in which consideration of likely innovation effects might support finding an antitrust violation or provide a defense of otherwise anticompetitive conduct.

Keywords: Innovation, antitrust, Sherman Act, monopolization

JEL Classification: K21, L41