Product market regulation and innovation efficiency

Chiara Franco (), Fabio Pieri and Francesco Venturini ()
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Chiara Franco: Department of International Economics, Institutions and Development, Catholic University of the Sacred Heart of Milan

No 1313, Working Papers from Department of Applied Economics II, Universidad de Valencia

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.

Keywords: R&D; knowledge production; efficiency; product market regulation (search for similar items in EconPapers)
JEL-codes: L5 L6 O3 O5 (search for similar items in EconPapers)
Pages: 37 pages
Date: 2013-05
New Economics Papers: this item is included in nep-eff, nep-ino, nep-reg and nep-tid
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

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