We scrutinize the scope of auctions in the presence of downstream interactions and information externalities by using …

early stages or to protect mature firms from competition to appropriate these externalities. However, non … externalities appear along the lifecycle. In a simple model, we show that it may be efficient to subsidize innovative firms in their …-benevolent politicians may not choose efficient policies. Real-world examples indicate that politicians tend to concentrate on externalities …

Empirical studies have uncovered an inverted-U relationship between product-market competition and innovation. This is … inconsistent with the original Schumpeterian Model, where greater competition reduces the profitability of innovation. We show that … the model can predict the inverted-U if the innovators' talent is heterogenous, and privately observable. With competition …