Subsidizing Technological Innovations in the Presence of R&D Spillovers

Carsten Helm 1  und Anja Schöttner 2
  • 1 Technical University Darmstadt, Karolinenpl. 5,, Darmstadt, Germany
  • 2 University of Bonn,, Bonn, Germany

Abstract

We analyze a situation where a principal wants to induce two firms to produce an output, for example electricity from renewable energy sources. Firms can undertake non-contractible investments to reduce production cost of the output. Part of these investments spills over and also reduces production cost of the other firm. Comparing a general price subsidy and an innovation tournament, we find that the principal’s expected cost of implementing a given expected output is always higher under the tournament, even though this scheme may lead to more innovation.

Artikel kaufen
Erhalten sie sofort unbegrenzten Zugriff auf den Artikel.
Anmelden
Haben Sie den Zugang bereits erworben? Melden Sie sich bitte an.


oder
Zugriff über Ihre Institution

Zeitschrift + Hefte

Suche