Essays in competition policy, innovation and banking regulation
Abstract
This thesis investigates the optimal enforcement of competition policy in innovative
industries and in the banking sector. Chapter 2 analyses the welfare impact
of compulsory licensing in the context of unilateral refusals to license intellectual
property. When the risk-free rate is low, compulsory licensing is shown unambiguously
to increase consumer surplus. Compulsory licensing has an ambiguous
effect on total welfare, but is more likely to increase total welfare in industries
that are naturally less competitive. Compulsory licensing is also shown to be an
effective policy to protect competition per se. The chapter also demonstrates the
robustness of these results to alternative settings of R&D competition.
Chapter 3 develops a much more general framework for the study of optimal
competition policy enforcement in innovative industries. A major contribution of
this chapter is to separate carefully a firm's decision to innovate from its decision to
take some generic anti-competitive action. This allows us to differentiate between
firms' counterfactual behaviour, according to whether or not they would have
innovated in the absence of any potentially anti-competitive conduct. In contrast
to the existing literature, it is shown that the stringency of optimal policy will
be harsher towards firms that have innovated in addition to taking a given anticompetitive
action.
Chapter 4 develops a framework for competition policy in the banking sector,
which takes explicit account of capital regulation. In particular, conditions are
derived under which increases in the capital requirement increase the incentives of
banks to engage in a generic abuse of dominance in the loan market, and to exploit
depositors through the sale of ancillary financial products. Thus the central contribution
of this chapter is to clarify the conditions under which stability-focused
capital regulation conflicts with competition and consumer protection policy in
the banking sector.
Type
Thesis, PhD Doctor of Philosophy
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