Subsidizing technological innovations in the presence of R&D spillovers

Carsten Helm and Anja Schöttner

No 154, Darmstadt Discussion Papers in Economics from Darmstadt University of Technology, Department of Law and Economics

Abstract: We analyze a situation where a principal wants to induce two firms to produce an output, e.g. 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 are always higher under the tournament, even though this scheme may lead to more innovation.

Keywords: R&D spillovers; tournaments; subsidies; moral hazard (search for similar items in EconPapers)
JEL-codes: D43 D82 H23 Q55 (search for similar items in EconPapers)
Date: 2005
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://www.econstor.eu/bitstream/10419/32071/1/504360655.PDF (application/pdf)

Related works:
Working Paper: Subsidizing Technological Innovations in the Presence of R&D Spillovers (2009)
Journal Article: Subsidizing Technological Innovations in the Presence of R&D Spillovers (2008)
Journal Article: Subsidizing Technological Innovations in the Presence of R&D Spillovers (2008)
Working Paper: Subsidizing Technological Innovations in the Presence of R&D Spillovers (2005)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:zbw:darddp:dar_36798

Access Statistics for this paper

More papers in Darmstadt Discussion Papers in Economics from Darmstadt University of Technology, Department of Law and Economics Contact information at EDIRC.
Bibliographic data for series maintained by ZBW - Leibniz Information Centre for Economics ().