Regulation, competition, and economic growth: A resource-advantage theory perspective

The purpose of this study is to examine the effects of government regulation on economic value creation through the lens of Resource-Advantage Theory. This study intends to shed more light on how industry-government relationships affect the entrepreneurial activities that drive economic growth.

The authors use a test of joint significance (MacKinnon et al., 2002) in a generalized linear model to examine how competition mediates the relationship between government regulation and jobs and wages. The research context is the US brewing industry for the year 2012.

High excise taxes and certain sales restrictions negatively impact competition, which ultimately affects economic value creation. State regulators may effectively balance the need to bring in tax revenues on the one hand and promote healthy competition on the other by turning to small business tax credits and exemptions. The results of a post hoc analysis indicate excise taxes have the most pronounced effect at the manufacturing level of the supply chain as opposed to the wholesale and retail levels.

The predictive validity of this study suggests that Resource-Advantage Theory is a useful and appropriate framework for understanding how industry–government relations impact the competitive processes that lead to economic value creation. From a practical standpoint, the study also has several implications for public policy, which are detailed in the latter stages of the paper.