Subsidizing Technological Innovations in the Presence of R&D Spillovers

Carsten Helm and Anja Schöttner

Publications of Darmstadt Technical University, Institute for Business Studies (BWL) from Darmstadt Technical University, Department of Business Administration, Economics and Law, Institute for Business Studies (BWL)

Abstract: We analyze a situation where a principal wants to induce firms to produce an output, e.g. electricity from renewable energy sources. Firms can undertake non-contractible investments to reduce production costs of the output. Parts of these investments spills over and also reduce production costs of the other firm. Comparing the general price subsidy and an innovation tournament, we find that the principal's expected cost of implementing a given expected output are always higher under the tournament, even though this scheme may lead to more innovation.

JEL-codes: D43 D82 H23 Q55 (search for similar items in EconPapers)
Date: 2005-11
Note: for complete metadata visit http://tubiblio.ulb.tu-darmstadt.de/36798/
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Published in Darmstadt Discussion Papers in Economics . 154 (2005-11)

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Related works:
Working Paper: Subsidizing Technological Innovations in the Presence of R&D Spillovers (2009)
Journal Article: Subsidizing Technological Innovations in the Presence of R&D Spillovers (2008)
Journal Article: Subsidizing Technological Innovations in the Presence of R&D Spillovers (2008)
Working Paper: Subsidizing technological innovations in the presence of R&D spillovers (2005)
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