Antitrust & Competition Policy Blog

Editor: D. Daniel Sokol
University of Florida
Levin College of Law

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Friday, May 4, 2007

Innovation, Competition and Growth: A Schumpeterian Perspective on Canada’s Economy

Posted by D. Daniel Sokol

Canada's C.D. Howe Institute has release a new study on the Antitrust-IP interface by Peter Howitt, the Lyn Crost Professor of Social Sciences at the Department of Economics, Brown University, as it relates to Canada- Innovation, Competition and Growth: A Schumpeterian Perspective on Canada’s Economy.  The report concludes:

• Competition policy should not be relaxed in hopes of boosting innovation, because more competition actually strengthens the incentive to innovate. Recent empirical work points to a positive relationship between product market competition and productivity growth or innovativeness within a firm or industry.
• Canada needs to be wary of further extensions of patent protection, which could serve to discourage innovation more than stimulate it. The more broadly we extend patent rights to include such things as software and genetic combinations, the more we discourage follow-on inventors and inhibit the flow of ideas.
• Without sacrificing academic values that sometimes conflict with commercial interests, Canadian universities should continue to develop ties with private enterprise, to see that innovative ideas turn into adopted technologies.
• Openness to international trade is crucial for keeping pace with global technological change, as is a favourable R&D environment, offering clear messages for trade and tax policy.
• The effects of innovation on income inequality can be mitigated by strengthening the educational system and reducing mobility barriers, implying that federal and provincial governments should examine their approaches to education, with close attention to fundamental analytical skills, and emphasize policies that support labour mobility.

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