It is widely feared that private sector innovation is constrained by 'red tape'. Philippe Aghion and colleagues test that view on data from France, where firms of more than 50 employees face far heavier regulatory obligations. The results suggest that regulations do hamper innovation - but the negative effects are only for incremental innovations, not radical innovations.
Philippe Aghion
15 June 2021 Paper Number CEPCP607
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This work is published under POID and the CEP's Growth programme.