This empirical examination compares product innovation under price caps and Rate of return regulation (RoRR) in US telecommunications. The econometric model comprises a count process (for product innovation) followed by a duration process (for regulatory delay). More services were created under...

The performance of auxiliary regression-based specification tests for parametric duration models estimated with censored data is evaluated. The test using asymptotic critical values has poor size. Bootstrapping corrects the size problem but results in a biased power curve.