Public Policy towards R&D; in Oligopolistic Industries.
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 r...Expand abstract
- American Economic Review
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