The Interplay between Innovation and Competition: the Internet Case

Internet represents the speeding up factor of the integration process between networks and content known as convergence. In this process, the spreading of broadband (and ultra-broadband) networks is the condition for the distribution of services and content based on IP protocol: on its accessibility depends the development of a more competitive and socially advanced environment, that reduces the digital divide enabling as many people as possible to accede to knowledge and learning instruments. It is a complex process requiring great investments and with uncertain returns, which leads to a dilemma, that thrills economists: the relationship between innovation and competition. The dynamism of innovation markets represents undoubtedly a challenge with regard to the capability to interpret and adequate economic theory to the great changes taking place. What lies beneath this work dealing with the relationship between innovation and competition is the following fundamental question: may the need of protecting the innovator make acceptable practices usually considered to be monopolistic? And if this is the case, when is no more the obtained dominant position an innovation development factor? When does it become an income for the monopolist decreasing efficiency and social welfare? Moving from this problem, the present work tries to critically analyse the interplay between competition and innovation with respect to the impact internet had in steady industries such as telecoms and media and the further implications in the digital content environment also for new players as convergence is taking place.