Public Policies in Investment Intensive Industries

Giovanni Immordino and Michele Polo

No 59, IEFE Working Papers from IEFE, Center for Research on Energy and Environmental Economics and Policy, Universita' Bocconi, Milano, Italy

Abstract: In this paper we review some recent work on public intervention in economic environments where firms undertake investments in research or in physical assets, and then select appropriate business practices to extract profits from the outcomes of the investment process. Public policies may take different forms: the release of an authorization; the setting of fines and damages for liability; or the choice of legal standards in antitrust law enforcement. The business practices are privately profitable but may be welfare enhancing or socially harmful. When expectations are optimistic, public policies face a trade-off between ex-ante effects on investment, that suggest hands off, and ex-post control of practices when harmful, that requires intervention. Our general result suggests that public policies should be softer when innovation is an important source of welfare improvements.

Keywords: Regulation; Antitrust; Legal Standards (search for similar items in EconPapers)
JEL-codes: D73 K21 K42 L51 (search for similar items in EconPapers)
Pages: 18 pages
Date: 2013
New Economics Papers: this item is included in nep-law and nep-reg
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Related works:
Chapter: Public Policies in Investment-Intensive Industries (2014)
Working Paper: Public Policies in Investment Intensive Industries (2013)
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Persistent link: https://EconPapers.repec.org/RePEc:bcu:iefewp:iefewp59

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