Abstract
AbstractThis paper focuses on the question of whether or not a reduction of the knowledge barrier is good for welfare. Based on a dynamic monopoly setting with simultaneous investment decisions in process as well as in product Research & Development (R&D), we show that a reduction of the knowledge barrier has ambiguous welfare consequences: due to a lower knowledge barrier, product quality and welfare increase in the short-run. However, this may not necessarily be the case in the long-run. One reason is that a positive long-lasting knowledge barrier shock triggers the monopolist sub-optimally to reduce its product R&D investments today and in the future at the cost of future product quality. This in turn may reduce welfare. Accordingly, to realize the first-best level of product quality, the long-run optimal R&D subsidy rate for product innovations increases with a reduction of the knowledge barrier.
Publisher
Springer Science and Business Media LLC
Subject
Management of Technology and Innovation,Organizational Behavior and Human Resource Management,Strategy and Management,Economics and Econometrics
Reference31 articles.
1. Acs, Z., Audretsch, D. B., & Lehmann, E. E. (2013). The knowledge spillover theory of entrepreneurship. Small Business Economics, 41, 757–774.
2. Attewell, P. (1992). Technology diffusion and organizational learning—the case of business computing. Organizational Science, 3(1), 1–19.
3. Audretsch, D. B. (1995). Innovation and industry evolution. Cambridge: MIT Press.
4. Audretsch, D. B., & Feldman, M. (1996). R&D spillovers and the geography of innovation and production. American Economic Review, 86, 630–640.
5. Buiter, W. H. (1984). Saddlepoint problems in continuous time rational expectations models: A general method and some macroeconomic examples. Econometrica, 52, 665–680.
Cited by
2 articles.
订阅此论文施引文献
订阅此论文施引文献，注册后可以免费订阅5篇论文的施引文献，订阅后可以查看论文全部施引文献