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Endogenous Regulatory Delay and the Timing of Product Innovation

Author

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  • James E. Prieger

    (Department of Economics, University of California Davis)

Abstract

This 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.

Suggested Citation

  • James E. Prieger, 2005. "Endogenous Regulatory Delay and the Timing of Product Innovation," Working Papers 86, University of California, Davis, Department of Economics.
    • Handle: RePEc:cda:wpaper:86
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    File URL: https://repec.dss.ucdavis.edu/files/yuqGPZWEnk2nPnsKHRJGEbqf/05-4.pdf
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    References listed on IDEAS

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    Cited by:

    1. Prieger, James E., 2007. "Regulatory delay and the timing of product innovation," International Journal of Industrial Organization, Elsevier, vol. 25(2), pages 219-236, April.

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    More about this item

    Keywords

    product innovation; regulatory delay; innovation delay; regulator; telecommunications; Ameritech;
    All these keywords.

    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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