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Electricity (de)regulation and innovation

Marianna Marino, Pierpaolo Parrotta () and Giacomo Valletta

Research Policy, 2019, vol. 48, issue 3, 748-758

Abstract: In this paper we study the effect of deregulation on innovation in the electricity sector using a sample of 31 OECD countries. Exploiting sharp reductions in the level of product market regulation, explicitly linked to changes in the legal framework, we perform a difference-in-difference analysis by matching data retrieved from the OECD International Regulation, OECD Patent Grants, and UN World Development Indicators databases. Our main findings suggest that a decrease in regulation intensity, following a significant reform, has a negative impact on patents (granted by the European Patent Office). This impact appears to be mainly due to the degree of market contestability. Finally, we find evidence of an inverted U-shaped relationship between regulation and innovation. This may imply that the effect of deregulation on innovation depends on the strength of the deregulatory process.

Keywords: Product market regulation; Patents; Innovation; Electricity (search for similar items in EconPapers)
JEL-codes: K23 L51 L94 O31 (search for similar items in EconPapers)
Date: 2019
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Working Paper: Electricity (de)regulation and innovation (2019)
Working Paper: Electricity (De)Regulation and Innovation (2017) Downloads
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