Journal of Productivity Analysis

, Volume 45, Issue 3, pp 299–315 | Cite as

Product market regulation and innovation efficiency

  • Chiara Franco
  • Fabio Pieri
  • Francesco Venturini


We study the role of upstream product market regulation (PMR) in innovation efficiency. By estimating a knowledge production function on OECD industries through a stochastic frontier analysis, we find that service regulation reduces R&D efficiency in the manufacturing sector. These results are robust to controlling for the institutional setting of the technology, the labour and the financial market, and to various forms of heterogeneity. The marginal impact of PMR is higher in less regulated economies indicating that large improvements in R&D efficiency cannot be obtained at the earlier stages of deregulation. Potential efficiency gains for late reformers are however sizeable.


R&D Knowledge production Efficiency Product market regulation 

JEL Classification

L5 L6 O3 O5 



The authors wish to thank two anonymous referees for their useful remarks on a previous version of the paper. Comments by Jimmy Lopez, Xose-Luis Varela-Irimia, Michela Vecchi, Andrea Lasagni and seminar participants at 17th Spring Meeting of Young Economists (Mannheim), SAEe 2012 (Vigo), SIE 2012 (Matera), NIESR (London), Middlesex Business School, Universitat Rovira i Virgili, SIEPI 2014 (Naples), IO Workshop (Alberobello) and University of Trento are also greatly acknowledged. The usual disclaimer applies. Fabio Pieri acknowledges the financial support by the Spanish Ministry of Science and Innovation (Project MINECO ECO2011-27619 co-financed with FEDER). Chiara Franco acknowledges the financial support of the National Research Project PRIN-MIUR 2010-11 “Climate changes in the Mediterranean area: scenarios, mitigation policies and technological innovation” (2010S2LHSE).

Supplementary material

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Supplementary material 1 (pdf 118 KB)


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Copyright information

© Springer Science+Business Media New York 2015

Authors and Affiliations

  • Chiara Franco
    • 1
  • Fabio Pieri
    • 2
  • Francesco Venturini
    • 3
    • 4
  1. 1.Department of International Economics, Institutions and DevelopmentCatholic University of the Sacred Heart of MilanMilanItaly
  2. 2.Departamento de Economia AplicadaUniversitat de ValenciaValenciaSpain
  3. 3.Department of EconomicsUniversity of PerugiaPerugiaItaly
  4. 4.NIESRLondonUK

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