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Original Articles

Predatory Innovation: A Step Beyond? (Understanding Competition in High-technology Markets)

Pages 7-33 | Published online: 21 Jul 2010

References

  • Sullivan , LA . 1977 . Handbook of the Law of Antitrust , 108 St Paul : West Publishing .
  • Calvani , T . 1985 . 'Non-price predation: a new antitrust horizon' . Antitrust Law Journal , 54 : 409
  • Salop , SC and Scheffman , DT . 1987 . 'Cost-raising strategies' . Journal of Industrial Economics , 36 : 19 Practices such as predatory promotion, predatory hiring, predatory spending and predatory litigation
  • Jorde , TM and Teece , DJ , eds. 1992 . Antitrust, Innovation and Competitiveness , 152 Oxford : Oxford University Press . A situation in which rivals take advantage of any profitable outcome of a firm's innovation
  • Hurwitz , JD and Kovacic , Wt . 1982 . 'Judicial analysis of predation: the emerging trends' . Vanderbilt Law Review , 35 : 114 This reason, along with the positive value of innovation in society, makes judges reluctant to decide against the innovator
  • Areeda , P and Turner , DF . 1975 . 'Predatory pricing and related practices under Section 2 of the Sherman Act' . Harvard Law Review , 88 : 730 – 732 .
  • Ordover , JA and Willig , RD . 1981 . 'An economic definition of predation: pricing and product innovation' . Yale Law Journal , 91 : 30
  • This type of rule would have the virtue of minimizing any distortion caused to the innovation process by long periods of judicial scrutiny, which frequency indicates a sort of ineluctability;
  • Furse , M . 1998 . 'The wronging of rights' . Competition , 6 : 1 This difficulty led some commentators to propose a per se legality of these practices
  • Sidak , JG . 1983 . 'Debunking predatory innovation' . Columbia Law Review , 83 : 1143
  • Dosi , G . 1988 . Technical Change and Economic Theory , London : Pinter Publishers .
  • Jorde , TM and Teece , DJ . 1998 . 'Innovation and co-operation: implications for competition and antitrust' . Journal of Reprints for Antitrust Law and Economics , 28 : 739
  • Carlton , DW . 1998 . 'Antitrust policy towards mergers when firms innovate: should antitrust recognize the doctrine of innovation markets?' . Journal of Reprints for Antitrust Law and Economics , 28 : 519
  • 1998 . 'Antitrust and the suppression of technology in the United States and Europe: is there a remedy?" . Antitrust Law Journal , 66 : 415 et seq
  • Liebowitz , SJ and Margolis , SE . 1994 . 'Network externality: an uncommon tragedy' . Journal of Economic Perspectives , 8 : 135
  • Katz , ML and Shapiro , C . 'Systems competition and network effects' . Journal of Economic Perspectives , 8 95
  • Arthur , WB . 1989 . 'Competing technologies, increasing returns and lock-in by historical events' . The Economic Journal , 99 : 116 For a seminal approach to the issues discussed in this section
  • Lopatka , JE and Page , WH . 1995 . 'Microsoft, monopolization and network externalities: some uses and abuses of economic theory in antitrust decision making' . Antitrust Bulletin , 40 : 320 – 321 .
  • Sullivan , ET and Hovenkamp , H . 1999 . Antitrust Law, Policy and Procedure (Cases, Materials, Problems) , 4th edn , 582 Charlottsville : Lexis Law Publishing .
  • Liebowitz , SJ and Margolis , SE . 1999 . Winners, Losers & Microsoft (Competition and Antitrust in Hightechnology) , Oakland : The Independent Institute . Although that temporary feature may be misguiding. Alleged inferior technologies as the VHS system and the Qwerty keyboard won their battle for the market against the Beta system and the Dvorak keyboard and, despite that initial consideration, they eventually became standards
  • '[T]hey are a temporary natural monopoly, so to speak. There are these winner-take-all results (…) but there are also network effects both going in the same direction. But it is no clear that we need to have it as a regulated monopoly, because it is no clear that it stays'. SJ Liebowitz Appraising Microsoft-!!, which remedies?, at , p 22.
  • Sheremata , WA . 1997 . 'Barriers to innovation: a monopoly, network externalities and the speed of innovation' . Antitrust Bulletin , 42 : 958
  • Blair , RD and Esquibel , AK . 1995 . 'The Microsoft muddle: a caveat' . Antitrust Bulletin , 40 : 259
  • Areeda and Hovenkamp refer to software's 'malleability' Antitrust Law, 1999 Supplement, Aspen Law & Business, p 491.
  • Easterbrook , FH . 1981 . 'Predatory strategies and counterstrategies' . University of Chicago Law Review , 48 : 310 See below the Foremost case
  • Brock , JW . 'Structural monopoly, technological performance, and predatory innovation: relevant standards under Sect. 2 of the Sherman Act' . American Business Law Journal , 21 291 1983 – 84 .
  • See Areeda and Hovenkamp op cit, 1999 Supplement, p 239; MH Morse Product Improvement or Predatory Innovation: What Has Microsoft Wrought? ABA, Section of Antitrust Law, p 16.
  • Singleton , ES . 1995 . 'The Microsoft antitrust consent decree' . Computer Law and Practice , 11
  • A view corroborated by Bill Gates' recent opinions in TIME, 22 November 1999, p 38.
  • Specially relating to the DR-DOS case, Memorandum Opinion, pp 2-3
  • Azcuenaga , ML . 'Technological innovation, international trade and competition policy' . 6 panel discussion on, available at
  • Ordover , JA and Willig , RD . 'Access and bundling in high-technology markets' . The Progressand Freedom Foundation Conference: Competition, Convergence and the Microsoft Monopoly . available at
  • Areeda , P . 1990 . 'Essential facilities: an epithet in need of limiting principles' . Antitrust Law Journal , 58 : 841
  • Levy , S . 'Should "vaporware" be an antitrust concern?' . Antitrust Bulletin , 42 33
  • Prentice , R . 1996 . 'Vaporware: imaginary high-tech products and real antitrust liability in a Post-Chicago world' . Ohio State Law Journal , 57 : 1173
  • In this sense, eg A Orrison 'Comment', Antitrust Bulletin VoI 42, p 46; Prentice op at, p 1205, 1997.
  • Petty , RD . 1998 . 'Antitrust and innovation: are product modifications ever predatory' . Suffolk University Law Review , 22 : 1012 – 1013 .
  • Auerbach , P . 1988 . “ 'technological innovation itself is a form of competition' ” . In Competition, the Economics of Industrial Change , 265 Basil Blackwell Ltd . This perspective is supported by a leader business strategist, who considers that 'not all technological change is strategically beneficial'; ME Porter Competitive Advantage (Creating and Sustaining Superior Performance), Free Press, New York, 1985, p 165. See also
  • Besen , SM and Farrell , J . 1994 . 'The process by which standards are established is a rich area of competitive strategy. By promoting standards, or preventing their adoption, firms crucially affect the competitive environment in which they will operate' in 'Choosing how to compete: strategies and tactics in standardization' . Journal of Economic Perspectives , 8 : 129
  • Cohen , WH and Lewin , RC . 1989 . “ 'Empirical studies of innovation and market structure' ” . In Handbook of Industrial Organization , Edited by: Schmalensee , R and Willig , R . Vol. VoI 2 , 1062 – 1065 . Amsterdam : North-Holland . For example, 'There exists no measure of innovation that permits readily interpretable cross-industry comparisons (…) Moreover, it is heroic to assume that even a properly measured representation of R&D stock or flow can fully summarize a firm's effort devoted to technological innovation'.
  • Lang , J Temple . 1997 . 'European Community antitrust law: innovation markets and high-technology industries' . Fordham International Law Journal , 20 : 721 'It is unlikely that there is any precise or useful statistical relationship between R&D expenditure of different companies in the same industry and their relative market shares at a given time later'
  • Schumpeter , JA . 1981 . Capitalism, socialism and democracy , 5th edn , 106 London : George Alien & Onwin . The debate on innovation and market structure was commenced by Schumpeter, who described monopoly as a better structure than perfect competition to succeed on innovation; see
  • Scherer , FM and Ross , D . 1990 . Industrial Market Structure and Economic Performance , 3rd edn , 652 Boston : Houghton Mifflin .
  • Arrow , KJ . 1971 . “ 'Economic welfare and the allocation of resources to invention' ” . In The Economics of Technological Change , Edited by: Rosenberg , N . 164 Hardmondsworth : Penguin .
  • Furse , M . 1998 . 'United States í Microsoft: ill-considered antitrust' . International Review of Law, Computers and Technology , 12 : 100 This is especially relevant when interventionist or regulatory measures are being considered
  • 1980 . ME Porter Competitive Strategy, Techniques for Analyzing Industries and Competitors , 165 New York : The Free Press . See Scherer and Ross op cit, p 645;
  • Fisher , FM . 1987 . On predation and victimless crime' . Antitrust Bulletin , 32 : 88 – 91 .
  • Memorandum Opinion, pp 36-37
  • Memorandum Opinion, pp 39-40

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