The impact of regulation on technical change

This paper examines the impact of regulation on a firm's choice of innovati ons and on the rate of technical change. Using a 1977-1987 panel of 20 U.S. interstate natural gas pipeline companies, I find that regulation led firm s to adopt a technology that augmented (i) noncapital more than capital and (ii) noncapital more than the technology the standard (unregulated) firm w ould have adopted. I also find that, while technical regress occurred over the sample period, regulation led to a small decline in the rate of technic al change and a small increase in production cost on average.