Government Transparency and Innovation: Evidence from Wireless Products

TL;DR

The paper investigates how government transparency, through a detailed wireless product database, significantly boosted innovation in the U.S. wireless industry over a decade, especially benefiting foreign competitors.

Contribution

It provides empirical evidence that government transparency can substantially enhance private sector innovation, with detailed analysis of the effects over time and across product classes.

Findings

Approximately doubled the use of new technologies over ten years

Boosted foreign competitors more than domestic ones

Effects waned over several years, possibly due to increased secrecy

Abstract

Does government transparency affect innovation? I evaluate the launch of a government database with detailed technical information on the universe of wireless-enabled products on the U.S. market (N 347 thousand). The results show the launch approximately doubled the use of new technologies in the following ten years, an indicator of follow-on innovation. The increase affected both products in the same and new product classes, suggesting novelty; waned over several years, potentially due to an increase in secrecy and patenting; and boosted foreign more than U.S. domestic competitors. These results highlight the importance of information for private sector innovation.