We find that most Asian economies are not very innovative by international standards, though in line with their level of development. Asian economies mostly obtain their technologies from abroad through FDI or via technological diffusion. However, FDI to Asia has been modest and entrepreneurship limited, largely as a consequence of the connections world. Politicians and business groups have been mutually supportive in erecting barriers to entry. As a result, most innovation has been within business groups or by new firms entering new sectors where existing business groups were absent or had not managed to erect unscalable entry barriers. However, three countries have developed some base for innovation: China, India and South Korea. In each, efforts to construct a supportive ecosystem, including policies for education, science and technology, as well as encouraging returning migrants with knowledge, are reaping dividends. Each has adopted a rather different model which we discuss in detail. Despite these achievements, the power and influence of the connections world in these three countries also remains a serious brake on their ability to innovate in the future.

This topic examines the nature of market structure, its characteristics and implications for managerial strategy and industrial structure, conduct and performance. The starting point is a discussion of markets and the characteristics that are relevant in terms of determining structure and strategy, in particular pricing. These characteristics relate to number of sellers, type of product, barriers to entry, pricing power and the importance of non-price competition. The four main types of structure, perfect competition, monopoly, monopolistic competition and oligopoly, are described in terms of these characteristics, and in each case both a graphical and algebraic analysis of the equilibrium is presented for both short-run and long-run situations. The different types of structure are compared in terms of price, output, profit, efficiency and welfare. The relationships between structure, conduct and performance are discussed in the light of recent empirical studies, along with some implications for government policy which are examined further in Chapter 14. Case studies illustrate the application of theoretical concepts in practice, particularly in the presence of Covid-19.

The chapter assesses the possible role of market investigation endowed with broad remedies, when a market suffers from competition problems and infringement cases under competition law provisions are infeasible or ineffective. It lays out a number of theories of harm, i.e., reasons why certain market features or behavior by market participants may lead to consumer harm compared to a relevant counterfactual. It identifies theories of harm in markets (i) where none of the firms is dominant and (ii) with a dominant firm but article 102 TFEU is not effective or applicable or (iii) a dominant firm may arise. It also argues that the European Commission should look for simple “intervention triggers” for a market investigation. While some of the identified harms are more likely or more pronounced in digital markets, a presumption that market investigations primarily addresses competition problems in digital markets is misguided. Finally, when sector regulation is, in principle, applicable, market investigations may fill a gap between standard competition tools and sector regulation.

This chapter provides an assessment of the economic merits of the New Competition Tool (NCT), as it was considered by the European Commission as a tool to address structural competition problems in a timely and effective manner. The NCT has strong analogies to the UK’s “markets regime,” which empowers the UK competition regulator, the Competition and Markets Authority (CMA), to initiate market studies and investigations. The authors review the UK’s markets regime and survey some of the competition concerns the regime is intended to address. This includes a selective review of UK market studies and investigations to illustrate some of the ways these concerns have been explored and a description of the remedies imposed or proposed. The authors conclude with a critical evaluation of the UK’s markets regime in light of this evidence and offer seven recommendations regarding the merits and design of market investigations as a New Competition Tool for the EU. In sum, they see a strong case for the introduction of a New Competition Tool to address factors that prevent effective competition in markets, and they see no benefit to limiting it to specific sectors and to dominant firms.