An Incremental Incentive Scheme (IIS) encourages some activity by rewarding an agent for overachieving a base level determined by past performance but not penalizing underachievement. We examine an IIS R&D subsidy in a dynamic model due to Grossman and Shapiro (1986). We show that the firm's...

This paper constructs a model of the provision of commercial music in which some consumers (enthusiasts) enjoy diversity and others (faddists) prefer to follow what is popular. Record companies sign up bands, only some of whom will 'succeed' - a process modelled in a number of alternate ways -...