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Product market regulation and innovation efficiency

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  • 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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    Cited by:

    1. repec:eee:wdevel:v:99:y:2017:i:c:p:75-94 is not listed on IDEAS
    2. A. Minniti & F. Venturini, 2014. "R&D Policy and Schumpeterian Growth: Theory and Evidence," Working Papers wp945, Dipartimento Scienze Economiche, Universita' di Bologna.
    3. Bengoa, Marta & Román, Valeriano Martínez-San & Pérez, Patricio, 2017. "Do R&D activities matter for productivity? A regional spatial approach assessing the role of human and social capital," Economic Modelling, Elsevier, vol. 60(C), pages 448-461.
    4. repec:gam:jsusta:v:10:y:2018:i:11:p:3974-:d:179518 is not listed on IDEAS

    More about this item

    Keywords

    R&D; knowledge production; eciency; product market regulation;

    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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