IDEAS home Printed from https://ideas.repec.org/p/cda/wpaper/86.html
   My bibliography  Save this paper

Endogenous Regulatory Delay and the Timing of Product Innovation

Author

Listed:
  • James E. Prieger

    (Department of Economics, University of California Davis)

Abstract

This paper endogenizes the interplay between innovation by a regulated firm and regulatory delay. When product innovation costs fall over time, an extra day of regulatory delay increases time to introduction by more than a day. In the signaling model, the firm therefore times its innovation to communicate its private information about the marginal cost of delay to the regulator. Successful signaling leads the regulator to reduce regulatory delay. The model places testable restrictions on the empirical relationship between innovation delay and regulatory delay. The model is consistent with data gathered from a large U.S. telecommunications provider.

Suggested Citation

  • James E. Prieger, 2005. "Endogenous Regulatory Delay and the Timing of Product Innovation," Working Papers 86, University of California, Davis, Department of Economics.
    • Handle: RePEc:cda:wpaper:86
    as

    Download full text from publisher

    File URL: https://repec.dss.ucdavis.edu/files/yuqGPZWEnk2nPnsKHRJGEbqf/05-4.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Gruber, Harald & Verboven, Frank, 2001. "The evolution of markets under entry and standards regulation -- the case of global mobile telecommunications," International Journal of Industrial Organization, Elsevier, vol. 19(7), pages 1189-1212, July.
    2. Paroma Sanyal, 2003. "Understanding patents: The role Of R&D funding sources and the patent office," Economics of Innovation and New Technology, Taylor & Francis Journals, vol. 12(6), pages 507-529.
    3. Sweeney, George, 1981. "Adoption of Cost-Saving Innovations by a Regulated Firm," American Economic Review, American Economic Association, vol. 71(3), pages 437-447, June.
    4. Michael H. Riordan, 1992. "Regulation and Preemptive Technology Adoption," RAND Journal of Economics, The RAND Corporation, vol. 23(3), pages 334-349, Autumn.
    5. Prieger, James E, 2001. "Telecommunications Regulation and New Services: A Case Study at the State Level," Journal of Regulatory Economics, Springer, vol. 20(3), pages 285-305, November.
    6. Yossef Spiegel & Daniel F. Spulber, 1997. "Capital Structure with Countervailing Incentives," RAND Journal of Economics, The RAND Corporation, vol. 28(1), pages 1-24, Spring.
    7. Prager, Robin A, 1989. "The Effects of Regulatory Policies on the Cost of Debt for Electric Utilities: An Empirical Investigation," The Journal of Business, University of Chicago Press, vol. 62(1), pages 33-53, January.
    8. Ando, Amy Whritenour, 1999. "Waiting to Be Protected under the Endangered Species Act: The Political Economy of Regulatory Delay," Journal of Law and Economics, University of Chicago Press, vol. 42(1), pages 29-60, April.
    9. Hazlett Thomas W. & Ford George S., 2001. "The Fallacy of Regulatory Symmetry: An Economic Analysis of the 'Level Playing Field' in Cable TV Franchising Statutes," Business and Politics, De Gruyter, vol. 3(1), pages 1-27, April.
    10. Cabral, Luis M B & Riordan, Michael H, 1989. "Incentives for Cost Reduction under Price Cap Regulation," Journal of Regulatory Economics, Springer, vol. 1(2), pages 93-102, June.
    11. Yossef Spiegel & Simon Wilkie, 1996. "Investment in a New Technology as a Signal of Firm Value Under Regulatory Opportunism," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 5(2), pages 251-276, June.
    12. Lyon, Thomas P & Huang, Haizou, 1995. "Asymmetric Regulation and Incentives for Innovation," Industrial and Corporate Change, Oxford University Press and the Associazione ICC, vol. 4(4), pages 769-776.
    13. Donald, Stephen G & Sappington, David E M, 1997. "Choosing among Regulatory Options in the United States Telecommunications Industry," Journal of Regulatory Economics, Springer, vol. 12(3), pages 227-243, November.
    14. Mailath, George J, 1987. "Incentive Compatibility in Signaling Games with a Continuum of Types," Econometrica, Econometric Society, vol. 55(6), pages 1349-1365, November.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Prieger, James E., 2007. "Regulatory delay and the timing of product innovation," International Journal of Industrial Organization, Elsevier, vol. 25(2), pages 219-236, April.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. James E. Prieger, 2005. "Endogenous Regulatory Delay and the Timing of Product Innovation," Working Papers 54, University of California, Davis, Department of Economics.
    2. James Prieger, 2008. "Product innovation, signaling, and endogenous regulatory delay," Journal of Regulatory Economics, Springer, vol. 34(2), pages 95-118, October.
    3. Prieger, James E., 2007. "Regulatory delay and the timing of product innovation," International Journal of Industrial Organization, Elsevier, vol. 25(2), pages 219-236, April.
    4. James E. Prieger, 2003. "The Timing of Product Innovation and Regulatory Delay," Working Papers 48, University of California, Davis, Department of Economics.
    5. James E. Prieger, 2003. "The Timing of Product Innovation and Regulatory Delay," Working Papers 19, University of California, Davis, Department of Economics.
    6. Guthrie, Graeme, 2006. "Regulating Infrastructure: The Impact on Risk and Investment," Working Paper Series 18946, Victoria University of Wellington, The New Zealand Institute for the Study of Competition and Regulation.
    7. Müller, Christine & Growitsch, Christian & Wissner, Matthias, 2010. "Regulierung und Investitionsanreize in der ökonomischen Theorie. IRIN Working Paper im Rahmen des Arbeitspakets: Smart Grid-gerechte Weiterentwicklung der Anreizregulierung," WIK Discussion Papers 349, WIK Wissenschaftliches Institut für Infrastruktur und Kommunikationsdienste GmbH.
    8. repec:vuw:vuwscr:18946 is not listed on IDEAS
    9. Graeme Guthrie, 2006. "Regulating Infrastructure: The Impact on Risk and Investment," Journal of Economic Literature, American Economic Association, vol. 44(4), pages 925-972, December.
    10. Nykamp, Stefan & Andor, Mark & Hurink, Johann L., 2012. "‘Standard’ incentive regulation hinders the integration of renewable energy generation," Energy Policy, Elsevier, vol. 47(C), pages 222-237.
    11. Cullmann, Astrid & Nieswand, Maria, 2016. "Regulation and investment incentives in electricity distribution: An empirical assessment," Energy Economics, Elsevier, vol. 57(C), pages 192-203.
    12. Lyon, Thomas P. & Huang, Haizhou, 1997. "Innovation and imitation in an asymmetrically-regulated industry," International Journal of Industrial Organization, Elsevier, vol. 15(1), pages 29-50, February.
    13. Dewenter, Ralf & Kruse, Jörn, 2011. "Calling party pays or receiving party pays? The diffusion of mobile telephony with endogenous regulation," Information Economics and Policy, Elsevier, vol. 23(1), pages 107-117, March.
    14. Cullmann, Astrid & Nieswand, Maria, 2015. "Regulation and Investment Incentives in Electricity Distribution," VfS Annual Conference 2015 (Muenster): Economic Development - Theory and Policy 113090, Verein für Socialpolitik / German Economic Association.
    15. Armstrong, Mark & Sappington, David E.M., 2007. "Recent Developments in the Theory of Regulation," Handbook of Industrial Organization, in: Mark Armstrong & Robert Porter (ed.), Handbook of Industrial Organization, edition 1, volume 3, chapter 27, pages 1557-1700, Elsevier.
    16. Weisman, Dennis L., 2002. "Is there 'Hope' for price cap regulation?," Information Economics and Policy, Elsevier, vol. 14(3), pages 349-370, September.
    17. Ricardo Paredes, 2002. "A further step to deregulation, or the risk to destroy the incumbent: Chile’s Local Telephony Market," Working Papers wp194, University of Chile, Department of Economics.
    18. Dennis L. Gärtner, 2022. "Corporate Leniency in a Dynamic World: The Preemptive Push of an Uncertain Future," Journal of Industrial Economics, Wiley Blackwell, vol. 70(1), pages 119-146, March.
    19. Noel Uri, 2001. "Telecommunications in the United States and Changing Productive Efficiency," Journal of Industry, Competition and Trade, Springer, vol. 1(3), pages 321-335, September.
    20. Alberto Galasso & Mihkel Tombak, 2014. "Switching to Green: The Timing of Socially Responsible Innovation," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 23(3), pages 669-691, September.
    21. Christian Schultz, 2003. "Information, Polarization and Delegation in Democracy," CESifo Working Paper Series 1104, CESifo.

    More about this item

    Keywords

    product innovation; regulatory delay; innovation delay; regulator; telecommunications; Ameritech;
    All these keywords.

    JEL classification:

    • L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation
    • L96 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Telecommunications

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:cda:wpaper:86. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Letters and Science IT Services Unit (email available below). General contact details of provider: https://edirc.repec.org/data/educdus.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.