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Optimal R&D subsidies in a model with physical capital, human capital and varieties

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  • Gómez, Manuel A.
  • Sequeira, Tiago N.

Abstract

In this paper, we analyze the social planner solution of an endogenous growth model with physical capital, human capital and R&D. The model incorporates three sources of inefficiency: monopolistic competition in the intermediate-goods sector, duplication externalities and spillovers in R&D. A complete stability analysis for the optimal growth problem of this model is provided. We characterize the optimal policy that can decentralize the optimal solution and find that the path of the optimal R&D subsidy can be non-monotonic.

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  • Gómez, Manuel A. & Sequeira, Tiago N., 2013. "Optimal R&D subsidies in a model with physical capital, human capital and varieties," Economic Modelling, Elsevier, vol. 30(C), pages 217-224.
    • Handle: RePEc:eee:ecmode:v:30:y:2013:i:c:p:217-224
    DOI: 10.1016/j.econmod.2012.07.019
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    More about this item

    Keywords

    Endogenous growth; R&D; Optimal policy;
    All these keywords.

    JEL classification:

    • H20 - Public Economics - - Taxation, Subsidies, and Revenue - - - General
    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General

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