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Product Innovation, Signaling, And Endogenous Regulatory Delay, James Prieger
Product Innovation, Signaling, And Endogenous Regulatory Delay, James Prieger
James E. Prieger
This paper examines the determinants of the timing of a monopolistic firm’s product innovation and regulatory approval, and proposes a signaling model with endogenous regulatory delay. Regulatory delay exerts a multiplier effect on total time to market, because when the firm expects the regulator to take longer to grant approval, the firm delays its product introduction. The firm can time its innovation to communicate its private information about the marginal cost of delay to the regulator. Successful signaling in the separating equilibrium leads the regulator to reduce regulatory delay. The implications of the model are consistent with data on innovation …
The Rules Of The Road Or Roadblocks On The Information Highway? Regulation And Innovation In Telecommunications, James Prieger, Daniel Heil
The Rules Of The Road Or Roadblocks On The Information Highway? Regulation And Innovation In Telecommunications, James Prieger, Daniel Heil
James E. Prieger
Regulatory policy in telecommunications must balance short-term efficiency (low prices) against the firms’ incentives to innovate, which have longer reaching impacts on economic welfare. Historically, policy tended to sacrifice dynamic efficiency for the sake of competitive prices and static efficiency. In the last few decades, economists and other researchers have begun to document the large welfare costs of ignoring dynamic efficiency. We analyze the impact regulation has on innovation in a simple theoretical framework. We then turn to the empirical evidence that regulation dampens firms’ incentive to innovate in the telecommunications industry in general and the market for broadband Internet …