Market Leaders and Industrial Policy

This article provides an overview of recent progress in the theory of market structure, of the role of market leaders and the scope of industrial policy, presents new results through simple examples of quantity competition, price competition and competition for the market and develops new applications to the theory of competition in presence of network externalities and learning by doing, of strategic debt financing in the optimal financial structure, of bundling as a strategic device, of vertical restraints through interbrand competition, of price discrimination and to the theory of innovation. Finally, it draws policy implications for antitrust issues with particular reference to the approach to abuse of dominance and to the protection of IPRs to promote innovation.