By Dirk Auer –
The relationship between competition and innovation has puzzled economists for the last century. This had led to a growing body of work which ultimately concludes that no market structure is strictly superior at fostering innovation. Despite these findings, the European Commission has recently adopted a number of decisions – including the two Google cases – wherein it concludes that more firms in any given market will produce greater choice and more innovation for consumers. I call this the “Structuralist Innovation Presumption.” This paper shows that the Commission’s presumption is at odds with sound economics and that a more nuanced approach is required.
