REGULATION OF MULTIAGENT RESEARCH-AND-DEVELOPMENT

The article focuses on the regulation problems raised by two specific characteristics of research and development: first, that it is normall y desirable that several units pursue the same goal, and second, that only the best of the final products made by these units is worthwhile to society. When firms have private information, these characteristics are seen to generate a substitution effect which in some situations i mplies that the resources allocated to R&D under asymmetric informatio n are excessive relative to the full-information allocation. I thus id entify asymmetric information as one possible source of excessive allo cations to research and development.