The concept of dynamic competition in antitrust embodies both the essence of competition and the reassessment of its existence. In fact, competition inherently is a dynamic process in which market actors continuously strive to outperform each other in a world of scarce resources. Dynamic competition embodies the fundamental and authentic essence of competition. In that respect, dynamic competition is an ongoing and ever-changing process that should have always persisted.
On the other hand, dynamic competition is a relative novelty in the field of competition. This is because the analysis of competition has predominantly and conveniently remained static, as lawyers and economists have focused, respectively, on formalizing and institutionalizing antitrust implications. In that respect, dynamic competition disrupts the traditional, static evaluation of competition and should always be evaluated.
But what precisely is meant by the term “dynamic competition”? It is imperfect competition—and nothing else. Dynamic competition challenges the negative connotation of imperfect competition and emphasizes the crucial need that any thriving competitive process necessarily needs to move away from idealized models of “perfect competition” that are neither realistic nor praiseworthy. Dynamic competition refers to the critical recognition and acceptance of the characteristics and outcomes of imperfect competition. Market failures thus become embraced rather than minimized. On the other hand, when perfect competition models are abandoned, dynamic competition can interestingly underscore the importance of reassessing market efficiencies in relation to market dynamics. Specifically, static efficiencies may result in long-term, dynamic harms that justify closer examination by antitrust authorities. In both aspects, dynamic competition vouches for a departure from perfect competition models and either applauds market imperfections—dynamic competition as an antitrust defense—or detects unperceived market imperfections—dynamic competition as an antitrust offense. Because dynamic competition is a conceptual vehicle simultaneously for antitrust defenses as well as antitrust offenses, dynamic competition is antitrust’s double-edged sword: Its sharpened edges cut both ways for antitrust litigants.
I propose that we go “beyond” dynamic competition if that expression is to become a totem in academia or practice. Assessing competition dynamically is merely assessing competition with ever-changing circumstances. Joseph Schumpeter himself warned against using the term “dynamic competition” as a sacred emblem when he wrote that “dynamic” only means an analysis of economic development:
. . . I called it “dynamics.” But it is preferrable to avoid this expression here, since it so easily leads us astray because of the associations which attach themselves to its various meanings. Better, then, to say simply what we mean: economic life changes . . . . The author begs to add another more exact definition, which he is in the habit of using: what we are about to consider is that kind of change arising from within the system which so displaces its equilibrium point that the new one cannot be reached from the old one by infinitesimal steps. Add successively as many mail coaches as you please, you will never get a railway thereby.
Anticipating a few years later his “gales of creative destruction,” Schumpeter explains not only that dynamic competition is inherently the competition from innovation; he also invites us not to be focused on the word “dynamic” and to focus more on the disequilibrium that comes from changes.
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Video: ALJ 86:3 Beyond Dynamic Competition Symposium Introduction
