Resource title

R&D Subsidies and the Surplus Appropriability Problem

Resource image

image for OpenScout resource :: R&D Subsidies and the Surplus Appropriability Problem

Resource description

It may be optimal from a welfare perspective to use R&D subsidies when the source of R&D distortions originates from the surplus appropriability problem and technological spillovers in the form of knowledge spillovers, creative destruction, and duplication externalities are absent. Hence, R&D subsidies may constitute the optimal policy even when subsidies directly targeted on monopoly pricing could be applied. The result holds when dynamic effects are important relative to static effects and when governments spending is restricted. The latter characteristic arises when a government is unable or unwilling to use the level of spending required to implement the optimum policy. The argument is developed in a semi-endogenous growth model where the only distortion is monopoly pricing of intermediate goods.Keywords: R&D, policy instruments, welfare, market powerJEL: O38, O41

Resource author

Anders Sørensen

Resource publisher

Resource publish date

Resource language

eng

Resource content type

application/pdf

Resource resource URL

http://hdl.handle.net/10398/7541

Resource license

Check the according license before adaptation. When adapting give credits to the original author.