In this book, we aimed to demonstrate that governance and regulatory quality matters for innovation on its own and through interactions with market structure as well as distance to the technology/efficiency frontier. Two observations have informed this aim. First, the received wisdom reflected in the policy debate tends to establish shortcuts between competition, product-market deregulation and globalization on the one hand and innovation on the other. Secondly, the existing literature, despite its richness and long history, tends to analyse the determinants of innovation separately rather than jointly. Yet, innovation is costly and associated with uncertain returns, externalities, indivisibilities and information asymmetries. Although most of these aspects are central to the analysis in the existing literature, the ways in which governance and regulation impact on these characteristics and hence on the innovation outcomes are not investigated adequately. The contributors to the book demonstrate that incorporating governance, regulation and market structure and their interactions into the analysis is both necessary and rewarding.
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