Skip to main content
Article thumbnail
Location of Repository

Deregulation and R&D in Network Industries: The Case of the Electricity Industry

By Tooraj Jamasb and Michael G. Pollitt


Electricity reform has coincided with a significant decline in energy R&D activities. Technical progress is crucial for tackling many energy and environmental issues as well as for long-term efficiency improvement. This paper reviews the industrial organisation literature on innovation to explore the causes of this decline, and shows that it was predicted by the pre-reform literature. More recent evidence endorses this conclusion. At the same time, R&D productivity and innovative output appear to have improved in both electric utilities and equipment suppliers, in line with general improvements in the operating efficiency of the sector. Despite this, a lasting decline in basic R&D and innovation input into basic research may negatively affect development of radical technological innovation in the long run. There is a need for reorientation of energy technology policies and spending toward more basic research, engaging more firms in R&D, encouraging collaborative research, and exploring public private partnerships

Topics: Classification-JEL: L94, O38, innovation, R&D expenditure, electricity reform, regulation, ownership
Publisher: Faculty of Economics
Year: 2006
OAI identifier:
Provided by: Apollo

Suggested articles


  1. (1996). A reprise of size and R&D, doi
  2. (2004). Acquisition of entrepreneurial firms: How private and public targets differ,
  3. (1978). An econometric assessment of cost savings from coordination in US electric power generation, doi
  4. (2003). An empirical analysis of electricity regulation on technical change in Texas,
  5. (2004). and Database, accessed at
  6. (1999). Balkanization and the future of electricity R&D, doi
  7. (1942). Capitalism, Socialism, and Democracy, Harper and Row, doi
  8. (1996). Changes in Electricity-Related R&D Funding, General Accounting Office,
  9. (2003). Corporate governance and innovation, doi
  10. (2003). Corporate governance, dividend payout policy, and the interrelation between dividends, R&D, and capital investment, doi
  11. (2004). Deregulation, restructuring and changing doi
  12. (1976). Determinants of research and development activity by electric utilities: doi
  13. Developing Monopoly Price Controls, Update document, Consultation document,
  14. (2004). Does competition reduce costs? Assessing the impact of regulatory restructuring on U.S. electric generation efficiency, Cambridge Working Papers doi
  15. (1991). Effects of acquisitions on R&D inputs and outputs, doi
  16. (1984). Effects of federal support on company-financed R and D: The case of energy, doi
  17. (1999). Electric Power Technology: Opportunities and Challenges of Competition, International Energy Agency,
  18. (1978). Electric utilities: Scale economies and diseconomies, doi
  19. (1998). Electric Utility Deregulation: Implications for Research and Development,
  20. (2004). Electricity Distribution Price Control Review – Regulatory Impact Assessment for Registered Power Zones and the Innovation Funding Incentive, Office of Gas and Electricity Markets,
  21. (2005). Electricity liberalization in Britain: The quest for a satisfactory wholesale market design, doi
  22. (2005). Electricity sector reform in developing countries: A survey of empirical evidence on determinants and performance, World Bank Policy Research Working Paper 3549, World Bank, doi
  23. (2002). Electricity sector restructuring and competition: A transactionscost perspective, doi
  24. (1998). Electricity sectors in transition, doi
  25. (1989). Empirical studies of innovation and market structure, doi
  26. (1936). Factors affecting the costs of airplanes, doi
  27. (2001). From the state to the market: A survey of empirical studies on privatisation, doi
  28. (2000). Impacts de l’ouverture à la concurrence sur la R&D dans le secteur électrique, doi
  29. (2002). Induced technical change in energy and environmental modelling: Analytic approaches and policy implications,
  30. (1974). Innovation and regulation, doi
  31. (2000). Is public R&D a complement or substitute for private R&D? A review of the econometric evidence, doi
  32. (2002). Issues and options for restructuring electricity supply industries,
  33. (2004). Japanese Electricity Industry Research and Development, The Federation of Electric Power Companies and The Central Electric Power Council.
  34. (1999). Learning without experience: Strategic implications of deregulation and competition in the electricity industry, doi
  35. (2005). Liberalization and R&D in Japanese Electricity Industry - An Initial Observation of Patent Data, paper presented at
  36. (2003). Liberalization and the balance of R&D activities: An empirical analysis, doi
  37. (1975). Market structure and innovation: A survey, doi
  38. (1983). Markets and Hierarchies: A Study in the Economics of Internal Organization,
  39. (2003). Mergers and acquisitions and innovation strategies, doi
  40. (2000). Modelling energy technology dynamics: methodology for adaptive expectations models with learning by doing and learning by searching, doi
  41. (2002). New networks of technological creation in energy industries: Reassessment of the roles of equipment suppliers and operators, doi
  42. (2000). On-linear dynamic effects in the composition of R&D,
  43. (1999). Power Loss: The Origins of Deregulation and Restructuring in the American Electric Utility System, The doi
  44. (1983). Power pooling: An exercise in industrial coordination, doi
  45. (2002). Privatization processes and the redefinition of corporate R&D boundaries, doi
  46. (2003). Privatization’s effects on R&D investments, doi
  47. (1993). Productive efficiency in public and private firms, doi
  48. (2004). R&D choice in restructured industries: In-house v/s collaborative research in the US electricity industry, doi
  49. (1998). R&D in UNIPEDE Countries: Overview of R&D Organisation and Projects,
  50. (1995). R&D, Technological progress and efficiency change in industrial activities, The Review of Income and Wealth, doi
  51. (2002). Reform and regulation of the electricity sectors in developing countries, doi
  52. (1984). Regulation, capital vintage, and technical change in the electric utility industry, doi
  53. Regulatory Reform in Network Industries, doi
  54. (2005). Restructuring and efficiency in the U.S. electric Power sector, Cambridge Working Papers in Economics,
  55. (1997). Restructuring and privatisation of the CEGB -Was it worth it?, doi
  56. (1971). Scale frontiers in electric power,
  57. (1995). Separability test for the electricity supply industry, doi
  58. (1995). Supply side reform and UK economic growth: What happened to the miracle?, doi
  59. (2004). Technological externalities and economies of vertical integration in the electric utility industry, doi
  60. (1995). Testing for subadditivity of vertically integrated electric utilities, doi
  61. (1996). The British Electricity Experiment – Privatization: The Record, the Issues, the Lessons, Earthscan: London Sweeney, G.
  62. (1995). The cost of nuclear power compared with alternatives to the Magnox programme,
  63. (2002). The declining role of the state in infrastructure investments in the UK,
  64. (1990). The diffusion of new technologies: Evidence form the electric utility industry, doi
  65. (1962). The economic implications of learning-by-doing, doi
  66. (2003). The effects of M&A on the innovation performance of acquired companies, doi
  67. (1988). The effects of regulation on research and development: Theory and evidence, doi
  68. (1990). The impact of corporate restructuring on industrial research and development, doi
  69. (2004). The impact of M&A on the R&D process: An empirical analysis of the role of technological and market relatedness, Research Policy (forthcoming). doi
  70. (1999). The impact of regulation on the technical change, doi
  71. (2004). The impacts of liberalisation on innovation processes in the electricity sector, doi
  72. (1974). The implications of regulation for induced technical change, doi
  73. (1991). The measurement of vertical economies and the efficient structure of the electric utility industry, doi
  74. (2003). The organization of R&D activities within privatized companies, doi
  75. (2003). The privatization of infrastructures in the theory of the state: An empirical overview and a discussion of competing theoretical explanations,
  76. (1997). The proper scope of government: Theory and application to prisons, doi
  77. (2001). The Restructuring and privatisation of the regional electricity companies in England and Wales: A social cost benefit analysis, Fiscal Studies, doi
  78. (2003). The role of knowledge: Technological innovation in the energy system, doi
  79. (1934). The Theory of Economic Development: An Inquiry into Profits, Capital, Credit, Interest, and the Business Cycle,
  80. (1985). The transaction cost approach to vertical integration: An empirical examination, doi
  81. (1996). The winners and losers so far,
  82. (1977). Two British errors: Their size and some possible lessons,
  83. (1997). Unintended Consequences: Energy R&D in a Deregulated Market. Pacific Northwest National Laboratory,
  84. (1998). Utility restructuring and the transformation of industrysponsored R&D, doi
  85. (1980). Vertical integration and technological innovation, doi
  86. (1994). Vertical integration efficiencies and electric utilities: A cost complementarity perspective, doi
  87. (1994). Welfare Consequences of Selling Public Enterprises: An Empirical Analysis, doi

To submit an update or takedown request for this paper, please submit an Update/Correction/Removal Request.