Understanding Dynamic Competition: New Perspectives on Potential Competition, “Monopoly,” and Market Power

Dr. David Teece argues for rethinking competition policy through the lens of dynamic competition rather than traditional static models. He poses that a dynamic competition paradigm, which focuses on innovation, entrepreneurship, and evolving capabilities, is more relevant and beneficial to consumers and society than a static competition paradigm, which focuses on price, output, and market concentration.

The dynamic competition paradigm views innovation and entrepreneurship as the true drivers of competition. It places importance on potential and unseen competitors, not just current market players. It also places focus on firm capabilities—especially dynamic capabilities such as adaptability and innovation—to properly understand market power.

Dr. Teece also calls for antitrust enforcement to better account for how firms innovate, grow, and compete over time, especially in fast-moving tech markets.

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