Subsidizing Cooperative And Noncooperative R&D: An Equivalence Result?

Abstract

We show for a widely-used class of models for strategic R&D that optimally subsidizing cooperative R&D or noncooperative R&D leads to the same level of private R&D investments. We then highlight the limitations of the framework that are responsible for this finding and conclude that policy recommendations based on the type of model used here should be treated as highly tentative.

Keywords:

• R&D subsidies
• cooperative R&D
• differentiated oligopoly
• JEL Classification L43; O32

^†This article is based on the third chapter of my Ph.D. thesis. I have received valuable comments on earlier versions of the paper from Paul Geroski, Stephen Martin, Louis Phlips, and seminar participants at the annual E.A.R.I.E. conference in Copenhagen, September 1998. The comments of an anonymous referee improved the presentation of the paper considerably. Responsibility for the contents of this writing is mine.

^†This article is based on the third chapter of my Ph.D. thesis. I have received valuable comments on earlier versions of the paper from Paul Geroski, Stephen Martin, Louis Phlips, and seminar participants at the annual E.A.R.I.E. conference in Copenhagen, September 1998. The comments of an anonymous referee improved the presentation of the paper considerably. Responsibility for the contents of this writing is mine.

Notes

^†This article is based on the third chapter of my Ph.D. thesis. I have received valuable comments on earlier versions of the paper from Paul Geroski, Stephen Martin, Louis Phlips, and seminar participants at the annual E.A.R.I.E. conference in Copenhagen, September 1998. The comments of an anonymous referee improved the presentation of the paper considerably. Responsibility for the contents of this writing is mine.