Competition and Innovation Policy

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Philip Lowe, Jul 12, 2008

Innovation and competition go hand in hand. Innovative markets are competitive markets and innovative companies succeed in them. In the European Commission, as in competition authorities across the world, our focus is on ensuring that this happens in the most efficient and fair manner. In this article, I will aim to dispel a few myths about the relationship between competition and innovation policy, drawing my evidence from both well-established economic theory and DG Competition’s day-to-day case practice. In doing so, I will open with a caveat: Competition policy cannot work miracles. The true cornerstones of an innovation society are its education, its research and development policies, and its infrastructure. Businesses compete to provide consumers with goods and services, with the best choice and quality at the lowest costs. Innovation therefore depends on business initiative and enterprise. Good competition policies can complement these requirements. Such policies provide a solid framework for business to compete, but they cannot force businesses to compete.

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