The knowledge created by private spending on research and development (R & D) generates benefits for society as well as for the firm performing the research, so there is a strong case for government intervention to encourage R & D. But intervening in the market has costs, and these costs may...

The knowledge created by private spending on research and development (R&D) generates benefits for society as well as for the firm performing the research, so there is a strong case for government intervention to encourage R&D. But intervening in the market has costs, and these costs may exceed...

There is a sound public policy case for subsidizing R&D. When firms perform R&D, they create knowledge that allows them to introduce new products, improve existing goods and services or reduce production costs. However, some of the knowledge created inevitably leaks out or spills over to other...