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Public policy towards R&D in oligopolistic industries

Leahy, D. and Neary, J. P. (1995) Public policy towards R&D in oligopolistic industries. CEPDP, 270. Centre for Economic Performance, London School of Economics and Political Science, London, UK.

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Identification Number: 270

Abstract

This paper examines the free-market and socially optimal outcomes in a dynamic oligopoly model with R&D spillovers. First-best optimal subsidies to R&D are higher when firms play strategically against each other but lower when they cooperate on R&D (at least with high spillovers) and when they play strategically against the government. Second-best optimal subsidies to R&D are presumptively higher than first-best ones, but 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 is high.

Item Type: Monograph (Discussion Paper)
Official URL: http://cep.lse.ac.uk
Additional Information: © 1995 the authors
Subjects: H Social Sciences > HD Industries. Land use. Labor
Sets: Collections > Economists Online
Research centres and groups > Centre for Economic Performance (CEP)
Date Deposited: 12 Aug 2008 15:18
Last Modified: 01 Oct 2010 09:16
URI: http://eprints.lse.ac.uk/id/eprint/20692

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