Public Policy Towards R&D in Oligopolistic Industries

Dermot Leahy and J. Peter Neary

No 1243, CEPR Discussion Papers from C.E.P.R. Discussion Papers

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 policy is high.

Keywords: R&D Cooperation; R&D Spillovers; Research Development; Research Joint Ventures; Strategic Aspects; Subgame Perfect Equilibrium (search for similar items in EconPapers)
JEL-codes: D43 L13 O32 (search for similar items in EconPapers)
Date: 1995-10
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Citations: View citations in EconPapers (23)

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Related works:
Journal Article: Public Policy towards R&D in Oligopolistic Industries (1997)
Working Paper: Public Policy Towards R&D in Oligopolistic Industries (1995)
Working Paper: Public policy towards R&D in oligopolistic industries (1995)
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