Does regulation affect the pace and nature of innovation and if so, by how much? We build a tractable and quantifiable … sharp reduction in the firm's innovation response to exogenous demand shocks for firms just below the regulatory threshold …. We then quantitatively fit the parameters of the model to the data, finding that innovation at the macro level is about 5 …

-by-step innovation. Innovations result from costly R&D investments and move technology up one step. Competition is inversely measured by …-and-neck. All these results are consistent with the predictions of step-by-step innovation models …

As an empirical example of this externality, we analyze the innovation induced by the obesity epidemic. Obesity is … associated with an increase in the incidence of many diseases. The induced innovation hypothesis is that an increase in the … incidence of a disease will increase technological innovation specific to that disease. The empirical economics literature has …