Antitrust Environment and Innovation

Abstract

The effects of antitrust enforcement by the U.S.government on innovation in the U.S. are examined.In this analysis,innovation is measured by the level of patent activity (number of patents filedand the number of patents granted) from 1953 to 2000, which was obtained fromthe U.S. Patent and Trademark Office (USPTO). Data from the Department of Justice (DOJ) detailing the number of antitrustcase filings, including both civil and criminal filings, from 1953 to 2000 isused as input for antitrust enforcement.Estimation of the models was donewith EViews 4.0 Econometric Software using innovation as a function of laggedinnovation, the level of U.S. R&D expenditure, the rate of growth in realGDP, the U.S. unemployment rate, and the antitrust enforcement variables. Results indicate that civil antitrust case filings, not criminal antitrustcase filings, have a significant impact on innovation.This may beexplained by the fact that prosecuting firms that violate the antitrust lawssends a message that inappropriate behavior will not be tolerated, andconsequently, firms seek legitimate ways of remainingcompetitive.Further, these findings indicate that civil antitrust filingsare seen as a way to protect intellectual property and strongly encourageinnovation that leads to economic improvement. (SRD)

Keywords: U.S. Department of Justice, U.S. Patent & Trademark Office (USPTO), Antitrust laws, Innovation process, Patents, Intellectual property