Data Suggests Not All Industrial Policy Sacrifices Competition by Design

In this piece for ProMarket, authors Petros Boulieris, Bruno Carballa-Smichowski, Maria Niki Fourka, and Ioannis Lianos discuss the evolving relationship between industrial policy and competition law. While historically treated as distinct and even conflicting domains, recent developments have prompted a reassessment of their interaction. Industrial policy is now increasingly seen not just as a tool for national development, but as a strategic mechanism for achieving technological leadership, economic security, and resilience. In their new paper, New Industrial Policy Design and Competition: A Computational Approach, the authors categorize global industrial policies into three frameworks—traditional techno-nationalism, new techno-nationalism, and techno-globalism—and evaluate their compatibility with competition metrics, offering insights into how governments can pursue national strategies without undermining competitive markets.

The authors point to Europe as a focal point in the debate, where concerns persist that strong enforcement of competition law impedes industrial policy goals, such as building European champions or supporting nascent sectors through state aid. However, empirical data challenges this view. For instance, evidence from the UK suggests that industrial policies have not significantly affected market concentration or firm markups, undermining arguments that competition enforcement necessarily limits industrial growth. On the contrary, research consistently supports the idea that robust competition promotes economic dynamism, institutional efficiency, and innovation. Still, influential voices like former ECB President Mario Draghi argue for a reimagined competition framework—one that actively shapes markets in light of network effects, scale economies, and the demands of modern technological development—echoed by recent European Commission initiatives like the Competitiveness Compass.

The article also explores the different objectives driving modern industrial policies, distinguishing between those aiming for national reindustrialization and security, and those seeking to address global challenges through cooperative frameworks. While techno-nationalist policies aim to bolster domestic innovation and sovereignty, they can potentially clash with techno-globalist goals such as climate change mitigation and technology diffusion. The authors stress that competition law itself can serve techno-globalist aims, such as curbing the market power of global digital platforms to promote broader consumer welfare. However, there remains a need for more empirical research into how these varied industrial strategies—especially the newer, post-pandemic forms—interact with the goals and principles of competition policy…

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