Government Transparency and Innovation: Evidence from Wireless Products

Abstract

We exploit a 1998 administrative quasi-experiment to analyze the effects of government transparency on follow-on innovation. Using the universe of U.S. wireless products, we find that the publication of technical details of new products online increased follow-on technology use from an average of 0.2 to 1.36 subsequent products within five years. The increase peaked at three years, concentrated among competitors and incumbents, and was largest among foreign firms that used technologies introduced by U.S. firms. The results document that government regulations affect innovation by altering information frictions.