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Subsidizing cooperative and noncooperative R&D in duopoly with spillovers

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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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Author notes

  1. Jeroen Hinloopen

    Present address: Department of Economics, Faculty of Technology, Policy and Management, Technical University Delft, P.O. Box 5050, 2600 GB, Delf, The Netherlands

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    1. Jeroen Hinloopen
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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

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