10 Ways Government Stifles Competition
Acting as a kingmaker, the Department of Energy stifles innovation and competition. As reported in Wired Magazine in 2009, DOE has many programs intended “to advance the green agenda while stimulating the economy”, of which their Advanced Technology Vehicle Manufacturing incentive may be the most ambitious. The loans to Nissan, Ford, Tesla, and Fisker were certainly welcome boosts to the recipients, but there is a serious downside. The flow of private capital to ventures not anointed by the DOE is reduced, in large part because venture capitalists revise their assessment of risk. Given the enormous capital needed to bring a new cleantech car to market, and the fact that DOE has stepped up with 80% of the total, preference would be given to those with government backing. Private capital, being strongly leveraged in the one case, ends up choosing from a smaller pool of startups, reducing competition. Another downside is that companies focus on pursuing a DOE loan, with their engineers working on documentation for DOE instead of on the project at hand.
