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Deregulation and R&D in Network Industries: The Case of the Electricity Industry

Tooraj Jamasb and Michael Pollitt ()

Cambridge Working Papers in Economics from Faculty of Economics, University of Cambridge

Abstract: Electricity reform has coincided with a significant decline in energy R&D activities. Technical progress is crucial for tackling many energy and environmental issues as well as for long-term efficiency improvement. This paper reviews the industrial organisation literature on innovation to explore the causes of this decline, and shows that it was predicted by the pre-reform literature. More recent evidence endorses this conclusion. At the same time, R&D productivity and innovative output appear to have improved in both electric utilities and equipment suppliers, in line with general improvements in the operating efficiency of the sector. Despite this, a lasting decline in basic R&D and innovation input into basic research may negatively affect development of radical technological innovation in the long run. There is a need for reorientation of energy technology policies and spending toward more basic research, engaging more firms in R&D, encouraging collaborative research, and exploring public private partnerships.

Keywords: innovation; R&D expenditure; electricity reform; regulation; ownership (search for similar items in EconPapers)
JEL-codes: L94 O38 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-com, nep-eff, nep-ene, nep-ind, nep-ino, nep-lam, nep-net and nep-reg
Date: 2005-08
Note: EPRG
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