Public Policy and Innovation: Two Cases

Two fertile fields for research on the relationships between public policies and innovation are transportation and environmental protection. In both cases, numerous policy instruments having different purposes, some of which are unrelated to the rate and direction of technological change, have been brought to bear on a rather diverse collection of related industries, some regulated relatively heavily and others subject to only a few administrative controls. Unfortunately, relatively few studies of the effect of transportation or environmental policy actions on innovation have been undertaken, and apparently no comprehensive study has ever been made in either area of how policies interact or how their impact differs according to such factors as market concentration or extent of regulation.