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Endogenous Regulatory Delay and the Timing of Product Innovation

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  • Prieger, James

    (U 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.

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Bibliographic Info

Paper provided by University of California at Davis, Department of Economics in its series Working Papers with number 05-4.

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Date of creation: Jun 2005
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Handle: RePEc:ecl:ucdeco:05-4

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  1. Gruber, Harald & Verboven, Frank, 2001. "The evolution of markets under entry and standards regulation -- the case of global mobile telecommunications," International Journal of Industrial Organization, Elsevier, vol. 19(7), pages 1189-1212, July.
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  3. Ando, Amy Whritenour, 1999. "Waiting to Be Protected under the Endangered Species Act: The Political Economy of Regulatory Delay," Journal of Law and Economics, University of Chicago Press, vol. 42(1), pages 29-60, April.
  4. James E. Prieger, . "Regulation, Innovation, and the introduction of new telecommunications services," Department of Economics 00-08, California Davis - Department of Economics.
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  11. James E. Prieger, 2003. "Telecommunications Regulation and New Services: a Case Study at the State Level," Working Papers 011, University of California, Davis, Department of Economics.
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  13. Lyon, Thomas P & Huang, Haizou, 1995. "Asymmetric Regulation and Incentives for Innovation," Industrial and Corporate Change, Oxford University Press, vol. 4(4), pages 769-76.
  14. James Prieger, 2002. "A model for regulated product innovation and introduction with application to telecommunications," Applied Economics Letters, Taylor and Francis Journals, vol. 9(10), pages 625-629.
  15. Donald, Stephen G & Sappington, David E M, 1997. "Choosing among Regulatory Options in the United States Telecommunications Industry," Journal of Regulatory Economics, Springer, vol. 12(3), pages 227-43, November.
  16. Prager, Robin A, 1989. "The Effects of Regulatory Policies on the Cost of Debt for Electric Utilities: An Empirical Investigation," The Journal of Business, University of Chicago Press, vol. 62(1), pages 33-53, January.
  17. Mailath, George J, 1987. "Incentive Compatibility in Signaling Games with a Continuum of Types," Econometrica, Econometric Society, vol. 55(6), pages 1349-65, November.
  18. Thomas W. Hazlett & George S. Ford, 2001. "The Fallacy of Regulatory Symmetry: An Economic Analysis of the 'Level Playing Field' in Cable TV Franchising Statutes," Business and Politics, Berkeley Electronic Press, vol. 3(1), pages 2.
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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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