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The Impact of Regulation on Technical Change

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  • Gerald Granderson

Abstract

This paper examines the impact of regulation on a firm's choice of innovations and on the rate of technical change. Using a 1977‐1987 panel of 20 U.S. interstate natural gas pipeline companies, I find that regulation led firms to adopt a technology that augmented (i) noncapital more than capital and (ii) noncapital more than the technology the standard (unregulated) firm would have adopted. I also find that, while technical regress occurred over the sample period, regulation led to a small decline in the rate of technical change and a small increase in production cost on average.

Suggested Citation

  • Gerald Granderson, 1999. "The Impact of Regulation on Technical Change," Southern Economic Journal, John Wiley & Sons, vol. 65(4), pages 807-822, April.
    • Handle: RePEc:wly:soecon:v:65:y:1999:i:4:p:807-822
    DOI: 10.1002/j.2325-8012.1999.tb00201.x
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    References listed on IDEAS

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    1. Nelson, Randy A, 1984. "Regulation, Capital Vintage, and Technical Change in the Electric Utility Industry," The Review of Economics and Statistics, MIT Press, vol. 66(1), pages 59-69, February.
    2. V. Kerry Smith, 1974. "The Implications of Regulation for Induced Technical Change," Bell Journal of Economics, The RAND Corporation, vol. 5(2), pages 623-632, Autumn.
    3. Robin C. Sickles & Mary L. Streitwieser, 1998. "An analysis of technology, productivity, and regulatory distortion in the interstate natural gas transmission industry: 1977-1985," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 13(4), pages 377-395.
    4. V. Kerry Smith, 1975. "The Implications of Regulation for Induced Technical Change: Reply," Bell Journal of Economics, The RAND Corporation, vol. 6(2), pages 706-707, Autumn.
    5. Schmidt, Peter & Sickles, Robin C, 1984. "Production Frontiers and Panel Data," Journal of Business & Economic Statistics, American Statistical Association, vol. 2(4), pages 367-374, October.
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    7. Nelson, Randy A & Wohar, Mark E, 1983. "Regulation, Scale Economies, and Productivity in Steam-Electric Generation," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 24(1), pages 57-79, February.
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    9. H. Craig Petersen, 1975. "An Empirical Test of Regulatory Effects," Bell Journal of Economics, The RAND Corporation, vol. 6(1), pages 111-126, Spring.
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