Working Papers,
Copenhagen Business School, Department of Economics

Abstract: 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 power

JEL-codes: O38; O41

31 pages, September 13, 2005

Full text files

7541  

Download statistics

• Copenhagen Business School, Department of Economics
• Ordering Working Papers
• Home page for this series

Questions (including download problems) about the papers in this series should be directed to Lars Nondal ()
Report other problems with accessing this service to Sune Karlsson ().

RePEc:hhs:cbsnow:2005_017This page generated on 2024-12-21 04:36:10.