Science Policy Research Report: Regulation, Deregulation, and Technological Innovation

George Mason University, Fairfax VA

Investigators

Abstract

Technological innovation is alternatively provided as a rationale for regulation and for deregulation. The actual impact of regulation and deregulation on innovation depends on a number of factors, such as the design of the regulation, the specific industry being regulated and the way in which regulation is implemented. This research report summarizes this emerging literature for the policy community, with a focus on the regulation and deregulation of energy production, sale, and use. Energy is a very large economic sector that has been subject to a wide variety of regulations over the past century and is vital to the future of the economy and the environment. The report aims to advance the national health, prosperity and welfare and improve regulatory policy decision-making by making this expert literature more readily available and understandable. It also builds bridges between scholars and policy-makers by identifying key topics in this field that are of particular interest to the latter group. The research for this project involves reviewing literature across several disciplines, including economics, public administration, management, and political science. It encompasses all relevant major theoretical and conceptual frameworks, including profit maximization under perfect information, imperfect information, information exchange and bargaining, action under uncertainty, public choice, and regulatory capture. Technologically innovative responses to regulation and deregulation, particularly in the energy industry, depend on perceptions and expectations as well as on static economic and technological tradeoffs. To more fully understand the demand for evidence-based knowledge of this topic and better frame the synthesis in an accessible way, the researchers are conducting five to ten interviews with members of the regulatory community, such as past and present officials of regulatory agencies and representatives of regulated businesses, labor unions, and public interest organizations.