Electricity (de)regulation and innovation

Marianna Marino , Pierpaolo Parrotta (1, 2) , Giacomo Valletta

1 UNIL - Université de Lausanne = University of Lausanne
2 LEM - Lille économie management - UMR 9221

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.

Mots clés: Product market regulation Patents Innovation Electricity

Domaines: Sciences de l'Homme et Société; Economies et finances

Marianna Marino, Pierpaolo Parrotta, Giacomo Valletta. Electricity (de)regulation and innovation. Research Policy, 2019, 48 (3), pp.748-758. ⟨10.1016/j.respol.2018.11.005⟩. ⟨hal-02110526⟩