Endogenous Regulatory Delay and the Timing of Product Innovation
AbstractThis paper endogenizes the interplay between innovation by a regulated firm and regulatory delay. When product innovation costs fall over time, an extra day of regulatory delay increases time to introduction by more than a day. In the signaling model, the firm therefore times its innovation to communicate its private information about the marginal cost of delay to the regulator. Successful signaling leads the regulator to reduce regulatory delay. The model places testable restrictions on the empirical relationship between innovation delay and regulatory delay. The model is consistent with data gathered from a large U.S. telecommunications provider.
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Bibliographic InfoPaper provided by University of California, Davis, Department of Economics in its series Working Papers with number 54.
Date of creation: 06 Jun 2005
Date of revision:
product innovation; regulatory delay; innovation delay; regulator; telecommunications; Ameritech;
Find related papers by JEL classification:
- L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation
- L96 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Telecommunications
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