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In this paper, we introduce political competition in a sequential move tax competition game between two regions for foreign owned mobile capital. It shows that in case of sequential move, political delegation takes place only in the follower region, not in the leader region. Moreover, political competition need not necessarily lead to higher tax rate in equilibrium. These results are in the sharp contrast to the existing results.

We show that, in the case when innovations are for sale, increased product market competition, captured by reduced product market profits, can increase the incentives for innovations. The reason is that the incentive to innovate depends on the acquisition price which, in turn, might increase despite firms in the market making lower profits. We also show that stricter, but not too strict, merger and cartel policies tend to increase the incentive for innovations for sale by ensuring the bidding competition for the innovation and by increasing the relative profitability of being the most efficient firm in the industry. Moreover, it is shown that increased intensity of competition can increase the relative profitability of innovation for sale, relative to innovation for entry.

The notion of workable or effective competition is at the centre of EU competition law and policy, as it strives to achieve and maintain it. Some scholars do not mention it at all. Those who refer to it either do not explain it in any way or explicate it very shortly. In fact, the concept is too important to be ignored totally or elucidated briefly. The objective of this article is to provide a comprehensive analysis of the concept by focusing on the theory of workable or effective competition. It is argued that effective competition is the key for an in-depth study of the political economy (i.e. real policy goals, economic rationale behind individual competition rules, institutional requirements, and implications for distribution of wealth) of EU competition law and policy.