COMPETITION, COOPERATION, AND INNOVATION - ORGANIZATIONAL ARRANGEMENTS FOR REGIMES OF RAPID TECHNOLOGICAL-PROGRESS

Discussions of the link between firm size and innovation are outmoded because the boundaries of the firm have become fuzzy in recent decades. Strategic alliances - constellations of bilateral agreements among firms - are increasingly necessary to support innovative activities. Such alliances can facilitate complex coordination beyond what the price system can accomplish, while avoiding the dysfunctional properties sometimes associated with hierarchy. Antitrust law and competition policy need to recognize that these new organizational forms are often the functional antithesis of cartels, though they may have certain structural similarities. A more complete understanding of bilateral contracts and agreements ought to reveal when and how cooperation can support rather than impede innovation and competition.