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Journal of Economics

, Volume 66, Issue 2, pp 151–175 | Cite as

Subsidizing cooperative and noncooperative R&D in duopoly with spillovers

  • Jeroen Hinloopen
Articles

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.

Keywords

research and development subsidies cooperation Cournot duopoly spillovers 

JEL classification

L43 O32 

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Copyright information

© Springer-Verlag 1997

Authors and Affiliations

  • Jeroen Hinloopen
    • 1
  1. 1.Department of Economics, Faculty of Technology, Policy and ManagementTechnical University DelftDelfThe Netherlands

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