ICT diffusion across US and EU industries: Does upstream regulation matter?

- We explore whether upstream regulation affects the diffusion of ICT.
- We use parametric and semi parametric techniques in industry level data.
- We find that regulation in network industries affects negatively ICT investment.
- ICT diffusion is positively affected only by low levels of regulation.
- Overall, a nonlinear U shaped relationship arises between regulation and ICT.

We use parametric and semi-parametric econometric techniques to show that upstream regulation affects negatively Information and Communication Technology (ICT) investment. This influence becomes positive only at low levels of regulation. Overall, a nonlinear U shaped relationship arises between regulation and ICT.