Subsidizing cooperative and noncooperative R&D in duopoly with spillovers

  • J Hinloopen*
  • *Corresponding author for this work

Research output: Contribution to journalArticleAcademicpeer-review

Abstract

Comparing the effect on private R&D investments of allowing firms to cooperate in R&D with that of providing R&D subsidies reveals that in general the latter policy is more effective than the former in promoting R&D activity. Analyzing the implementation of both policies simultaneously reveals that subsidizing cooperative and noncooperative R&D leads to the same market outcome. The preferred R&D-stimulating policy is to subsidize optimally an agreement according to which firms only share the outcomes of their independent research.

Original languageEnglish
Pages (from-to)151-175
Number of pages25
JournalJournal of economics
Volume66
Issue number2
DOIs
Publication statusPublished - 1997
Externally publishedYes

Keywords

  • research and development
  • subsidies
  • cooperation
  • Cournot duopoly
  • spillovers
  • COMPETITION
  • VENTURES
  • POLICY

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