When Klein needed someone to write a brief supporting the Microsoft break-up, he chose Paul Romer, the Stanford economist widely credited with revitalizing the study of growth and innovation in the 1980s. Still, the new approach faces many criticisms, chief among them its speculative and somewhat ad hoc nature. Research into antitrust and innovation remains inconclusive. Indeed, there is little clear-cut evidence on whether small companies or large companies have a better track record with innovation. Small companies can generate new ideas without worrying about corporate bureaucracies or existing products.
Big companies have the advantage of sufficient resources for research and product development.
But it may very well be that in an era of relatively free-flowing venture capital, the resource advantage of big companies is less important. For the first time, it is possible for young, innovative companies to raise large sums and immediately challenge existing rivals. Thus, the New Economy model of innovation is the continual birth of startups that either grow big themselves or get snapped up by bigger fish. As economists focus on innovation, they may uncover principles to guide antitrust policy. One possibility, advanced by economists such as Romer, is that innovation will be squashed if big companies can choke off entry by new rivals.