Mar Reguant and Lanier Benkard, Graduate School of Business

New regulations effectively ban incandescent light bulbs in much of the world. Does the new prominence of lighting alternatives – compact fluorescent, LED, halogen incandescent – cause consumers to consider not only immediate prices but long-term costs? On the producer side, did the current spurt in lighting innovation require the new regulations? Was firm inertia due purely to consumer inattention? The answers may illuminate the role for government policy in spurring innovation.