Abstract
Comparing the effect on private R&D investments of allowing firms to cooperate in R&D with that of providing R&D subsidies reveals that in general the latter policy is more effective than the former in promoting R&D activity. Analyzing the implementation of both policies simultaneously reveals that subsidizing cooperative and noncooperative R&D leads to the same market outcome. The preferred R&D-stimulating policy is to subsidize optimally an agreement according to which firms only share the outcomes of their independent research.
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Hinloopen, J. Subsidizing cooperative and noncooperative R&D in duopoly with spillovers. Journal of Economics Zeitschrift für Nationalökonomie 66, 151–175 (1997). https://doi.org/10.1007/BF01234404
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DOI: https://doi.org/10.1007/BF01234404