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Dynamic Efficiency and Innovation
Dynamic efficiency is an increasingly important aspect when we consider the welfare consequences of market structures. I regard dynamic efficiency as form of efficiency that occurs over time in the sense that a market should meet our changing needs and wants as time progresses.
Naturally we expect to pay a premium price for innovative products that enhance the ‘customer experience’ or which deliver something else better than the ‘industry standard.’ But at the heart of this is the impact of process and product innovation by suppliers in the market place.
