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Threshold effects in the regulation-innovation nexus: evidence from the telecommunications industry

Author

Listed:
  • Michael L. Polemis

    (University of Piraeus
    Hellenic Competition Commission)

  • Markos Tselekounis

    (University of Piraeus
    Center for Advanced Studies in Management and Economics of the University of Évora (CEFAGE-UE))

Abstract

This study empirically tests the relationship between regulation and innovation in the telecommunications sector by deploying an efficient panel threshold model. The balanced panel dataset comprises of 32 OECD countries over the period 1995–2012. The empirical results unveil that beyond a certain threshold, a further increase in the (de)regulatory intensity leads to a decrease of the sectoral innovation activity. The empirical findings do explain the descriptive evidence of an inverted U-shaped relationship between regulation and innovation in the telecommunications sector since structural non-monotonic relationships are uncovered. Lastly, this study provides significant policy implications, arguing that regulators should develop mechanisms fostering innovation activity without much affecting the intensity of market competition.

Suggested Citation

  • Michael L. Polemis & Markos Tselekounis, 2021. "Threshold effects in the regulation-innovation nexus: evidence from the telecommunications industry," Journal of Regulatory Economics, Springer, vol. 60(1), pages 74-93, August.
    • Handle: RePEc:kap:regeco:v:60:y:2021:i:1:d:10.1007_s11149-021-09433-4
    DOI: 10.1007/s11149-021-09433-4
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    References listed on IDEAS

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    Cited by:

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    2. Ribeiro, Beatriz Couto & Ferrero, Luciane Graziele Pereira & Bin, Adriana & Blind, Knut, 2023. "Effects of innovation stimuli regulation in the electricity sector: A quantitative study on European countries," Energy Economics, Elsevier, vol. 118(C).
    3. Appiah, Michael & Li, Mingxing & Sehrish, Saba & Abaji, Emad Eddin, 2023. "Investigating the connections between innovation, natural resource extraction, and environmental pollution in OECD nations; examining the role of capital formation," Resources Policy, Elsevier, vol. 81(C).
    4. Chenguang Li & Zhenjun Qiu & Tao Fu, 2021. "The Role of Policy Perceptions and Entrepreneurs’ Preferences in Firms’ Response to Industry 4.0: The Case of Chinese Firms," Sustainability, MDPI, vol. 13(20), pages 1-19, October.

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    More about this item

    Keywords

    Innovation; Patents; Regulation; Telecommunications; Panel threshold model;
    All these keywords.

    JEL classification:

    • L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation
    • L96 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Telecommunications
    • L80 - Industrial Organization - - Industry Studies: Services - - - General
    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • C24 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Truncated and Censored Models; Switching Regression Models; Threshold Regression Models

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