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Subsidies to Technology Adoption when Firms'Information is Endogenous

Author

Listed:
  • Luca Colombo

    (Università Cattolica del Sacro Cuore
    Dipartimento di Economia e Finanza, Università Cattolica del Sacro Cuore)

  • Gianluca Femminis

    (Università Cattolica del Sacro Cuore
    Dipartimento di Economia e Finanza, Università Cattolica del Sacro Cuore)

  • Alessandro Pavan

Abstract

How should firms be incentivized to adopt new technologies when the technical merits and spillovers of such technologies are uncertain? We show that, when information is dispersed but exogenous, eciency can be induced with simple (constant) subsidies. When, instead, firms must also be incentivized to collect information eciently, subsidies must be conditioned on the ex-post profitability of the new technology and, when the cost of information acquisition is unknown to the planner, on the aggregate investment in the new technology. The optimal policy has a Pigou's flavor but accounts for the non-observability of firms' acquisition and usage of information.

Suggested Citation

  • Luca Colombo & Gianluca Femminis & Alessandro Pavan, 2023. "Subsidies to Technology Adoption when Firms'Information is Endogenous," DISCE - Working Papers del Dipartimento di Economia e Finanza def125, Università Cattolica del Sacro Cuore, Dipartimenti e Istituti di Scienze Economiche (DISCE).
    • Handle: RePEc:ctc:serie1:def125
    as

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    File URL: http://dipartimenti.unicatt.it/economia-finanza-def125.pdf
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    References listed on IDEAS

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    Cited by:

    1. Russell Davidson & Andrea Monticini, 2023. "Bootstrap Performance with Heteroskedasticity," DISCE - Working Papers del Dipartimento di Economia e Finanza def130, Università Cattolica del Sacro Cuore, Dipartimenti e Istituti di Scienze Economiche (DISCE).
    2. Valentina Colombo & Alessia Paccagnini, 2024. "Uncertainty and the Federal Reserve’s Balance Sheet Monetary Policy," DISCE - Working Papers del Dipartimento di Economia e Finanza def131, Università Cattolica del Sacro Cuore, Dipartimenti e Istituti di Scienze Economiche (DISCE).

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    More about this item

    Keywords

    endogenous information; investment spillovers; optimal policy; welfare.;
    All these keywords.

    JEL classification:

    • D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
    • D62 - Microeconomics - - Welfare Economics - - - Externalities
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness

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