Electricity (de)regulation and innovation |
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| Authors: | Marianna Marino Pierpaolo Parrotta Giacomo Valletta |
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| Institution: | 1. SKEMA Business School - Université Côte d’Azur, Avenue Willy Brandt, 59777 Euralille, France;2. IÉSEG School of Management (LEM-CNRS 9221), 3 rue de la Digue; IZA, Institute for the Study of Labor; and NoCeT, Norwegian Centre for Taxation, Norwegian School of Economics, 59000 Lille, France;3. EDHEC Business School, 24 avenue Gustave Delory, 59057 Roubaix, France |
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| 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. |
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| Keywords: | K23 L51 L94 O31 Product market regulation Patents Innovation Electricity |
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