Optimal technology policy: subsidies versus monitoring

M. Pilar Socorro

UFAE and IAE Working Papers from Unitat de Fonaments de l'Anàlisi Econòmica (UAB) and Institut d'Anàlisi Econòmica (CSIC)

Abstract: We analyze the optimal technology policy to solve a free-riding problem between the members of a RJV. We assume that when intervening the Government suffers an additional adverse selection problem because it is not able to distinguish the value of the potential innovation. Although subsidies and monitoring may be equivalent policy tools to solve firms' free-riding problem, they imply different social losses if the Government is not able to perfectly distinguish the value of the potential innovation. The supremacy of monitoring tools over subsidies is proved to depend on which type of information the Government is able to obtain about firms' R&D performance.

Keywords: RJV; moral hazard; adverse selection; subsidies; monitoring (search for similar items in EconPapers)
JEL-codes: D82 O31 O38 (search for similar items in EconPapers)
Pages: 31
Date: 2003-05-02
New Economics Papers: this item is included in nep-ino
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:aub:autbar:570.03

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