The development and implementation of competition policy is vital for the economy and democratic society. To promote strong, dynamic competition, fostering innovation is more important than seeking forms of efficiency. As the digital economy expands and innovation becomes central to economic welfare and national security, the analytic toolbox of competition enforcement agencies needs an update. Workhorse static analysis informed by formal economic models omitting innovation considerations can steer agencies to the wrong priorities. The alternative analytic framework advanced here – dynamic competition – focuses competition policy on protecting and advancing the innovation capabilities of business enterprises to enable the creation of new markets, not just the regulation of existing ones. The dynamic competition framework can assist economists and enforcement agencies to adopt a longer-term orientation, an awareness of organizational capabilities, and new tools to assist them in supporting vibrant economic activity. This title is also available as Open Access on Cambridge Core.