TECHNOLOGY POLICY AND THE ORGANIZATION OF RESEARCH-AND-DEVELOPMENT

In this study we examine how technology policy in the form of R&D subs idies and encouragement of research joint ventures (RJVs) affects the investment incentives of firms in various types of imperfectly competi tive markets. We find that joint ventures yield lower research intensi ties in the absence of subsidies. In the presence of optimal subsidy p olicy higher expected welfare is obtained with RJVs, but the optimal p olicy may also involve a more costly subsidy program. The analysis als o identifies possible difficulties in implementing socially optimal po licies arising from private incentives conflicting with the public int erest. (C) 1998 Elsevier Science B.V. All rights reserved JEL classifi cation: O38; O31; O32.