GROWTH, R&D AND WELFARE: THE ROLE OF PUBLIC POLICY

Antonio Minniti

Scottish Journal of Political Economy, 2006, vol. 53, issue 4, 447-460

Abstract: This paper analyzes the normative side of an R&D growth model in which market structure and growth are jointly determined in the equilibrium of a one‐sector economy under monopolistic competition. We find that a distortion in the allocation of R&D, namely the presence of technological spillovers between firms, generates two market failures: insufficient growth and excessive entry of firms. We show that this result is driven by the interplay between market structure and growth. A simple tax/subsidy scheme to support the efficient solution is proposed.

Date: 2006
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https://doi.org/10.1111/j.1467-9485.2006.00389.x

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Working Paper: Growth, R&D and welfare: the role of public policy (2006)
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Persistent link: https://EconPapers.repec.org/RePEc:bla:scotjp:v:53:y:2006:i:4:p:447-460

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