Review of Industrial Organization 22: 179–182, 2003. Book Review The Impact of Rate-of-Return Regulation on Technological Innovation,Mark W. Frank, The Bruton Center for Development Studies. Burlington, VT: Ashgate Publishing Company, 2001, ix + 135 pages, $69.95. ISBN 0-7546-1609-6. The key premise of this book is that the effect of regulation on the performance of ﬁrms with market power remains economically skeptical in terms of technological advancement and economic progress. The approach focuses on the technological change of monopolies subject to rate regulation. Speciﬁcally, regulation may cause monopolistic ﬁrms to conduct technological advancement at less than the optimal level as the costs of regulation outweigh the beneﬁts. Professor Frank identiﬁes two research questions concerning the impact of government regulation on the innovativeness of ﬁrms with market power. The ﬁrst is whether or not regulation motivates monopolies to invest more in technological innovation than otherwise. The second is whether or not social welfare advances more greatly with monopolies inducing more incentive for research and development. The study is based on the contributions of Schumpeter, mainly the idea that there is a positive relationship between monopoly power and innovation and the possibility that regulation could impact the innovation of monopolies. The book
Review of Industrial Organization – Springer Journals
Published: Oct 4, 2004
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