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Regulation chills minor (but not radical) technological innovations
Philippe Aghion, Antonin Bergeaud and John Van Reenen
February 2021
Paper No' :

Tags: productivity; innovation; regulation; growth

While there is suggestive evidence that regulations may have a stifling effect on innovation, there is as yet no rigorous economic framework to quantify the magnitude of such regulatory effects on innovation and the aggregate economy. This column proposes such a framework tests its implications on data from France. As the framework predicts, regulations do indeed hamper innovation, but the negative effects concern only incremental innovations and are absent for radical innovations. Overall, regulations are estimated to reduce aggregate innovations by 5%.