There is widespread concern that European economies are falling behind the US and Japan in the introduction of new technology and in their adaptation to structural change. The response of many governments has been the adoption of 'industrial policies'. What can economists contribute to the study of industrial policy? CEPR Research Fellow David Ulph convened a meeting at the Centre on 4th May to discuss possible research initiatives in this area.

Participants agreed there was a need to study how specific and general industrial policies had operated. In particular, did different policies conflict within a country? How did the industrial policies of different countries conflict? How did the structure of particular governments and industries affect the implementation of industrial policies?

Simon Domberger observed that European competition policy had fallen foul of the industrial policies pursued by individual countries. In particular, de-regulation had often left incumbent firms in a strong position. He suggested studying the possibility of stimulating competition on a European basis, for example by allowing incumbents outside a territory to put in bids when franchising a public utility.

Peter Holmes discussed his joint work with Geoffrey Shepherd at Sussex. They were investigating how different kinds of organisational structures, both of firms and governments, would affect the formulation and implementation of industrial policy. Their work also stressed the link between industrial policy and macroeconomic policy.

The link between factor markets and product markets was also considered. David Ulph spoke of the need to exploit and develop some of the recent work on imperfect competition and trade. In particular, relations between product and factor markets could provide part of the rationale for an industrial policy, as well as the basis for understanding how factor market problems might impede the development of particular industries.

Participants at the meeting noted the need to broaden the scope of the studies beyond Britain and France and bring in detailed knowledge of the industrial structure and policies of other European countries such as Italy, Germany, the Netherlands, and Spain.

The discussion at the meeting suggested two fairly natural research directions, one investigating the operation of specific policies in particular industries, the other both theoretical and empirical models of industrial structure and change. Specific related projects would be discussed at a subsequent meeting at the Centre in July.