Neil Tambe

Husband, Father, Citizen, Professional.

I'm a Detroiter who happens to enjoy writing, national parks, orange juice, the performing arts, and fanciful socks. More than anything though, I aspire to be a good husband, father, and citizen.

How and when does (de)regulation foster innovation?

Government regulation is a topic that's oft used as a political tool. Those in favor of regulation talk about how it protects consumers and those opposed talk about how regulation unnecessarily hinder business. Fair points.

Right now, innovation, growth, and job growth matter a lot. So I wonder, does regulation encourage or discourage innovation? Why?

As it turns out, a quick survey of research about the effects of regulation and deregulation suggests that the jury is still out. Rather, sometimes regulation and deregulation both encourage and discourage innovation depending on how it's conceived and how it's implemented.

So, this leaves an interesting research gap that inquiring minds (e.g., like those from regulators, policy makers, business leaders, workers, etc.) probably want to know about. It seems like anyone who investigated these questions in a rigorous way would probably do a lot of good. Here are some of the questions which seem to be relevant:

1. What principles should regulation / deregulation be written with to encourage, rather than discourage innovation?
2. How does said regulation / deregulation need to be implemented to encourage, rather than discourage innovation?
3. How can innovation be comprehensively measured (indicators and metrics)?

Some hypotheses of when innovation flourishes:
  • When standards are applied evenly
  • When standards are raised for an entire industry
  • When barriers to entry are lowered
  • When access to information for producers is not squelched
  • When infrastructure is already adequate in the industry for all market players
  • When consumers have transparency to behaviors once an industry is deregulated
  • When regulators have necessary independence from industry lobbyists and consumer groups
  • When regulatory agencies process claims quickly