Application of Competition Policy to High Tech Markets

Technological innovation has significant welfare implications. Competitive markets provide incentives to innovate, and innovation can be a catalyst for further competition. But economic analysis provides limited insight into the relationship between competition and the level of research and development effort and between the level of research and development effort and innovation. Innovation markets and future generation product markets are useful concepts when considering high tech markets. Instead of using market share to indicate market power, analysts should consider intellectual property assets, first mover advantages, network effects and open or proprietary standards. Strategic entry deterrence can be an important anti-competitive behaviour. This document comprises proceedings in the original languages of a roundtable on Application of Competition Policy to High Tech Markets which was held by the Committee on Competition Law and Policy in April 1996. It is published as a general distribution document under the responsibility of the Secretary General of the OECD to bring information on this topic to the attention of a wider audience. This is the ninth compilation published in an OECD series named “Competition Policy Roundtables.”