Goh, Ai-Ting; Olivier, Jacques - 2014
product (or "downstream") sector. Innovation takes place in both sectors. Following Gilbert and Shapiro (1990), we define … in the downstream sector increases the incentives of agents to do R&D in that sector but discourages innovation in the … downstream sector slows it down. We show that regardless of parameter values, welfare maximizing, rate of innovation maximizing …