Skip Navigation

This Article
Right arrow Full Text (PDF)
Right arrow Alert me when this article is cited
Right arrow Alert me if a correction is posted
Services
Right arrow Email this article to a friend
Right arrow Similar articles in this journal
Right arrow Alert me to new issues of the journal
Right arrow Add to My Personal Archive
Right arrow Download to citation manager
Right arrowRequest Permissions
Google Scholar
Right arrow Articles by LYON, T. P.
Right arrow Articles by HUANG, H.
Right arrow Search for Related Content
Related Collections
Right arrow L43 - Legal Monopolies and Regulation or Deregulation
Right arrow L96 - Telecommunications
Right arrow L98 - Government Policy
Right arrow O31 - Innovation and Invention: Processes and Incentives
Social Bookmarking
Add to CiteULike   Add to Connotea   Add to Del.icio.us  
What's this?

© 1995 Oxford University Press

research-article

Asymmetric Regulation and Incentives for Innovation

THOMAS P. LYONa and HAIZOU HUANGb

aUniversity of Chicago and Department of Business Economics and Public Policy, School of Business, Indiana University Bloomington, IN 47405, USA
bLondon School of Economics London, UK)

Abstract

Under asymmetric regulation, different firms in the same industry are subjected to different levels of regulatory restraint. We analyze the nature of innovation rivalry in such an industry, emphasizing that a rival may be able to inexpensively imitate an innovator's successful new technology. Although asymmetric regulation may slow the industry-wide pace of innovation, it does not necessarily do so. In fact, by weakening the regulated incumbent's incentive to imitate, regulation may make an unregulated entrant's innovation profitable, thereby accelerating innovation. Conversely, giving the regulated firm stronger incentives may backfire by producing either excessive or insufficient innovation; these negative outcomes are more likely the greater the cost-reducing potential offered by the new technology.


Add to CiteULike CiteULike   Add to Connotea Connotea   Add to Del.icio.us Del.icio.us    What's this?




Disclaimer: Please note that abstracts for content published before 1996 were created through digital scanning and may therefore not exactly replicate the text of the original print issues. All efforts have been made to ensure accuracy, but the Publisher will not be held responsible for any remaining inaccuracies. If you require any further clarification, please contact our Customer Services Department.