When 'innovation' means rule-breaking

When 'innovation' means rule-breaking

There is a simple reason the drug trade is so lucrative: Government mandates create a market opportunity for businesses willing to shirk the law.

In the technology and venture capital world, this principle has not gone unnoticed. Some of the highest profile recent start-ups were built to exploit unmet consumer demand created by regulatory restrictions. Uber and Airbnb, for instance, have prospered because taxis are hard to find, and hotels are expensive and heavily taxed, while there are plenty of ordinary people with extra automobile capacity and rooms to rent.

As technology know-how becomes less expensive and more pervasive, some start-ups “innovate” not by improving...

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