itif.org
Rethinking Antitrust: The Case
for Dynamic Competition Policy
GIORGIO CASTIGLIA | OCTOBER 2025
Antitrust policy relies too heavily on static models that focus on prices and market shares while
treating innovation as external. A dynamic approach that views competition as a process of
innovation is better suited to guiding policy in today’s technology-driven economy.
KEY TAKEAWAYS
Static models treat competition as equilibrium, judging markets mainly by prices and
market shares. This overlooks innovation and leads to flawed conclusions about long-term
welfare.
Dynamic competition sees rivalry as an ongoing process of innovation and adaptation. It
better captures how firms invest and compete in modern, fast-changing markets.
Hayek viewed competition as a discovery process wherein entrepreneurs test ideas and
prices guide coordination. This constant search fuels efficiency and adaptation.
Schumpeter highlighted creative destruction, in which new products and methods
displace the old. Innovation—even by large firms—drives growth and renewal.
High profits and market concentration reflect success at innovating and scaling, not
anticompetitive harm. In dynamic markets, size can support greater investment and R&D.
Antitrust should assess whether firms innovate and reinvest, not just whether they are big
or profitable. A dynamic lens ensures that policy supports growth and progress.
