Competition through Technical Progress

Konferenzbeitrag

The relationship between technical progress and price competition is a controversial issue in economics. This paper highlights the fact that investment in technical progress is an authentic type of competition which benefits the consumers rather than the industry. This type of competition exists when the potential for technical progress, which can be incorporated by firms through investment, is high enough. Competition is, in fact, made up of two components: A static one which is known as price or quantity competition and a dynamic one, the Technical Progress competition which also contribute to reduce prices and increase quantities for consumers. Consequently, the economic factors that increase a firm's margin do not have to be viewed as the consumers' enemy, but rather as an ally, under specific conditions, because they allow higher investments in new technology by which firms increase their capacities and attract higher demand from consumers. This paper also underlines that, for a mature market, the maximum Consumer Surplus as well as Social Welfare are attained by a constant level of combined competition which is only dependent on the size of the market and the number of firms. The level of combined competition can be defined as the product of the static and the dynamic level of competition. As a consequence, the higher the potential of technical progress is, the lower the level of static competition must be in order to reach the maximum level of Consumer Surplus and Social Welfare.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: 21st European Regional Conference of the International Telecommunications Society (ITS): "Telecommunications at New Crossroads: Changing Value Configurations, User Roles, and Regulation", Copenhagen, Denmark, 13th-15th September 2010 ; No. 18

Classification and Topics

• Classification: Wirtschaft ; Firm Behavior: Theory ; Market Structure, Pricing, and Design: Oligopoly and Other Forms of Market Imperfection ; Oligopoly and Other Imperfect Markets ; Economics of Regulation ; Telecommunications ; Microeconomic Analyses of Economic Development
• Subject: Investment ; Competition ; Technical Progress ; Dynamic Competition

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Jeanjean, François
• Event: Veröffentlichung
• (who): International Telecommunications Society (ITS)
• (where): Calgary
• (when): 2010

Further information

• Handle: http://hdl.handle.net/10419/44334
• Last update: 10.03.2025, 11:45 AM CET