Public Policy towards R&D; in Oligopolistic Industries.

Journal article

The authors consider the free-market and socially optimal outcomes in a general oligopoly model with many firms which first engage in R&D; and then compete in either output or price. Strategic behavior by firms tends to reduce output, R&D;, and welfare and so justifies higher subsidies except when R&D; spillovers are low and firms' actions are strategic substitutes. It also reduces the benefits of R&D; cooperation. Moreover, policies to encourage cooperation are likely to be redundant (since it is always privately profitable) and simulations suggest that the welfare cost of lax competition policy is high.

Authors: Leahy, D; Neary, J

• Publisher: American Economic Association
• Journal: American Economic Review
• Volume: 87
• Issue: 4
• Pages: 642 - 662
• Publication date: 1997-01-01
• ISSN: 0002-8282
• Language: English