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How do competition regulations affect innovation?

The effects of competition regulations on innovation are, in theory, ambiguous. Using a panel of twenty-five OECD countries over 1995–2015, we estimated how domestic and foreign competition affects innovation. Reducing regulation intensifies domestic and foreign competition, increasing R&D expenditure and patenting.

Does regulation prevent competition?

Elad Gil, writing in a blog post: In most industries, regulation prevents competition. This famous chart of prices over time reflects how highly regulated industries (healthcare, education, energy) have their costs driven up over time, while less regulated industries (clothing, software, toys) drop costs dramatically over time.

How do changes in regulation affect industry competition?

Changes in regulation can change the intensity of rivalry, or affect barriers to entry. Choices by competition, such as new pricing or distribution approaches, can also affect the path of industry competition. Five Forces analysis is essential to anticipate and exploit industry structural change.

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