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Upstream Product Market Regulations, ICT, R&D and Productivity

Author

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  • Kevin J. Fox
  • Gilbert Cette
  • Jimmy Lopez
  • Jacques Mairesse

Abstract

Our study aims to assess the actual importance of the two main channels via which upstream anti-competitive sector regulations are usually considered to impact productivity growth, i.e. by acting as a disincentive to business investments in R&D and in ICT. We estimate the specific impacts of these two channels and their shares in the total impact as opposed to alternative channels of investments in other forms of intangible capital that we cannot explicitly consider for lack of appropriate data such as improvements in skills, management and organization. To achieve this, we specify an extended production function explicitly relating productivity to R&D and ICT capital as well as to upstream regulations, and we specify two factor demand functions relating R&D and ICT capital to upstream regulations. These relations are estimated on the basis of an unbalanced panel of 15 OECD countries and 13 industries over the period 1987-2007. Confirming the results of previous similar studies, our estimates find that the impact of upstream regulations on total factor productivity can be sizeable, and they provide evidence that a good part of the total impact, though not a predominant one, is transmitted through investments in both R&D and ICT, and particularly the former
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Suggested Citation

  • Kevin J. Fox & Gilbert Cette & Jimmy Lopez & Jacques Mairesse, 2017. "Upstream Product Market Regulations, ICT, R&D and Productivity," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 63, pages 68-89, February.
  • Handle: RePEc:bla:revinw:v:63:y:2017:i::p:s68-s89
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    File URL: http://hdl.handle.net/10.1111/roiw.12252
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    More about this item

    JEL classification:

    • O43 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Institutions and Growth
    • L5 - Industrial Organization - - Regulation and Industrial Policy
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
    • O57 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Comparative Studies of Countries
    • L16 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Industrial Organization and Macroeconomics; Macroeconomic Industrial Structure
    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models

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