Entrepreneurship, Innovation, and Antitrust

AuthorRobert E. Litan
DOI10.1177/0003603X16673946
Published date01 December 2016
Date01 December 2016
Article
Entrepreneurship, Innovation,
and Antitrust
Robert E. Litan*
Abstract
Entrepreneurship is key to productivity growth, yet in recent decades new-firm formation has flagged.
There is some evidence that business con centration may be a contributing caus e. Well-designed
antitrust enforcement policy, especially aimed at policing abuse of market power by dominant plat-
forms, will be crucial to preserving opportunities for new entrants, especially in technology sectors.
But antitrust procedures should also be updated to speed up decisions so that legal outcomes are not
completely outpaced by technology.
Keywords
entrepreneurship, concentration, mergers, platforms
I. Introduction
The pace of innovation is probably the single most important variable in any economy, accounting for
at least half, and most likely more, of long-run growth and, hence, advances in average living standards
in the United States.
1
In recent years, a huge divide among economists and technologists has developed about innova-
tion’s future. Pessimists believe that the golden age of innovation is past and, like the diminishing
returns of other factors of production, innovation’s pace, too, will inevitably slow.
2
Others argue that
Moore’s Law (the doubling of computing power every eighteen months) will power ever faster
innovation and long-run growth, not only in the information technology sectors to which the ‘‘law’
originally applied, but in much of the rest of the economy, which is increasingly interwoven with
information technology.
3
*Board of Advisers of the American Antitrust Institute, Washington, D.C., USA
Corresponding Author:
Robert E. Litan, Board of Advisers of the American Antitrust Institute, Washington, D.C., WA 20036, USA.
Email: litanrobert2@gmail.com
1. I put aside here the controversial issue of how equally, or unequally, the fruits of growth are distributed. One can only tackle
so much in any article, and I have chosen here to concentrate only on the pace of growth generally, and how antitrust policy in
particular can affect it.
2. See,e.g.,R
OBERT J. GORDON,THE RISE AND FALL OF AMERICAN GROWTH:THE U.S. STANDARD OF LIVING SINCE THE CIVIL WAR
(2016).
3. See ERIK BRYNJOLFSSON &ANDREW MCAFEE,THE SECOND MACHINE AGE (2014); PETER DIAMANDIS &STEVEN KOTLER,BOLD:
HOW TO GOBIG,CREATE WEALTH,AND CHANGE THE WORLD (2015).
The Antitrust Bulletin
2016, Vol. 61(4) 580-594
ªThe Author(s) 2016
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DOI: 10.1177/0003603X16673946
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