Richardson, Martin; Wilkie, Simon - In: Journal of Regulatory Economics 7 (1995) 2, pp. 161-75
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...