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.
Growth, R&D and Welfare: the role of Public Policy / A. Minniti. - In: SCOTTISH JOURNAL OF POLITICAL ECONOMY. - ISSN 0036-9292. - STAMPA. - 53:(2006), pp. 447-460.
Growth, R&D and Welfare: the role of Public Policy
MINNITI, ANTONIO
2006
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.I documenti in IRIS sono protetti da copyright e tutti i diritti sono riservati, salvo diversa indicazione.