Economic analysis has come to have strong influence on antitrust analysis. Frequently, however, the economist's vision of a “good” industry is animated by the vision of perfect competition, with its assumption of homogeneous products, identical technologies, and firms competing solely on the basis of price, with prices equal to marginal cost, and earning zero economic profits. The chimera of perfect competition, however, is at odds with the reality of highly competitive technology driven industries.

Competition policy and antitrust analysis must begin to think differently about certain “monopoly” issues. The nature of competition in markets exposed to the effects of rapid technological innovation is quite different from competition in other markets. Market power is extremely difficult to calibrate, and the traditional models of competition – be they perfect competition, oligopoly, or monopoly – have limited utility. Accordingly, economists and antitrust lawyers must rethink some basic assumptions and recalibrate some metrics or risk promoting litigation outcomes and public policies that harm competition and consumers.

In many industries today new forms of competition dominate the landscape. In particular, innovation (both technical and organizational) animates the process in many sectors. Products are differentiated, often significantly so, due to differences in the technology employed. True hightech products are rarely commodities.

The introduction of new products and product differentiation accomplished by innovation is key to business success and customer satisfaction. In knowledge-based industries, performance features, quality, reliability, and service take on a special meaning. In the world of high technology, there is high uncertainty and supercharged competition.