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Market Regulation and Innovation: Direct and Indirect Effects

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  • Aurelien Quignon

    (University of Luxembourg)

Abstract

The effects of competition regulations on innovation are, in theory, ambiguous. Using a panel of twenty-five OECD countries over 1995–2015, we estimated how domestic and foreign competition affects innovation. Reducing regulation intensifies domestic and foreign competition, increasing R&D expenditure and patenting. Accounting for interaction between these two sources of product market competition, we find that domestic regulation directly led to growing R&D expenditure and patent production, whereas competition from foreign regulation influences innovation toward its effect on domestic competition.

Suggested Citation

  • Aurelien Quignon, 2022. "Market Regulation and Innovation: Direct and Indirect Effects," Journal of Industry, Competition and Trade, Springer, vol. 22(3), pages 429-456, December.
    • Handle: RePEc:kap:jincot:v:22:y:2022:i:3:d:10.1007_s10842-022-00390-y
    DOI: 10.1007/s10842-022-00390-y
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