THE EFFECTS OF MARKET CONCENTRATION ON PRICES AND INNOVATION IN THE EUROPEAN UNION

This article analyses the relationship between market concentration, price levels and innovation intensity in the European Union (EU). Drawing on industrial economic theories and data available from European Commission and Eurostat reports, the research explores how firm consolidation and oligopoly formation can influence competitive behaviour, consumer welfare and the pace of technological progress. The results of the literature suggest that moderate market concentration can stimulate innovation through the financial resources available for research and development, but excessive concentration tends to lead to higher prices and a decrease in innovative incentives. The analysis highlights the importance of a balanced competition policy, capable of promoting efficiency without sacrificing the diversity and competitiveness of European markets. Drawing on industrial economic theories, the article explores the tension between the economic efficiency associated with economies of scale and the risks of distortion of competition and price increases. It also examines the role of European competition policies in maintaining a balance between stimulating innovation and protecting consumers. The conclusions highlight that moderate market concentration can be beneficial for innovation, but excessive concentration reduces competitive pressure, affecting both price dynamics and the pace of technological progress.