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Product market regulation and innovation efficiency

Author

Listed:
  • Chiara Franco

    (Department of International Economics, Institutions and Development, Catholic University of the Sacred Heart of Milan)

  • Fabio Pieri

    (Departamento de Estructura Economica (Economia Aplicada II), Universitat de Valencia)

  • Francesco Venturini

    (Department of Economics, Finance and Statistics, University of Perugia)

Abstract

We study the role of upstream product market regulation (PMR) on innovation efficiency. By estimating a knowledge production function for a large sample of OECD industries through a stochastic frontier analysis, we find that service regulation remarkably reduces R&D efficiency in the manufacturing sector. These results are robust to controlling for the institutional setting of the technology, the labour and the financial market, as well as to various forms of heterogeneity such as, for instance, non-linearities in the effect of PMR. The marginal impact of upstream regulation is higher in less regulated economies indicating that large improvements in R&D efficiency cannot be achieved at the earlier stages of deregulation. We quantify total gains in R&D efficiency and patenting that could be obtained by late reforming countries by liberalizing the product market.

Suggested Citation

  • Chiara Franco & Fabio Pieri & Francesco Venturini, 2013. "Product market regulation and innovation efficiency," Working Papers 1313, Department of Applied Economics II, Universidad de Valencia.
    • Handle: RePEc:eec:wpaper:1313
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Ciriaci, Daria & Grassano, Nicola & Vezzani, Antonio, 2019. "Regulations and location choices of top R&D investors worldwide," Structural Change and Economic Dynamics, Elsevier, vol. 49(C), pages 29-42.
    2. Igna, Ioana A. & Rincon-Aznar, Ana & Venturini, Francesco, 2019. "Upstream regulation, factor demand and productivity: Cross-industry differences in OECD countries, 1975–2007," Information Economics and Policy, Elsevier, vol. 49(C).
    3. A. Minniti & F. Venturini, 2014. "R&D Policy and Schumpeterian Growth: Theory and Evidence," Working Papers wp945, Dipartimento Scienze Economiche, Universita' di Bologna.
    4. Jianping Liu & Kai Lu & Shixiong Cheng, 2018. "International R&D Spillovers and Innovation Efficiency," Sustainability, MDPI, vol. 10(11), pages 1-23, October.
    5. Kyriakos Drivas & Claire Economidou & Efthymios G. Tsionas, 2018. "Production of output and ideas: efficiency and growth patterns in the United States," Regional Studies, Taylor & Francis Journals, vol. 52(1), pages 105-118, January.

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    Keywords

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    JEL classification:

    • L5 - Industrial Organization - - Regulation and Industrial Policy
    • L6 - Industrial Organization - - Industry Studies: Manufacturing
    • O3 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights
    • O5 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies

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