Question

What is creative destruction? What role does it play in the evaluation of antitrust policy?

Please type your short answer below

Answer 1

Creative destruction can be defined as the incessant product and process innovation mechanism by which the newer production units replace outdated ones. This restructuring process permeates main aspects of macroeconomic performance, not only long-run growth however also structural adjustment, economic fluctuations, and the functioning of factor markets. However it would be difficult for large firms to continue to be innovative. As long as coercion is not used on the restriction of the entry, the small firms would not require any assistance from the government in order to succeed, thus means much more laissez-faire antitrust policy