Learning and Technology Adoptions
AbstractA government that wants to increase welfare by subsidizing either an industry’s sales or process innovations or both has to account for possible changes of production, when firms can foresee the government’s actions. In an optimal control framework welfare can be increased by subsidizing either an industry’s sales or process innovations. An earlier innovation date increases the price that is charged up to that innovation date, but decreases it afterwards, when process innovation costs depend on the date of innovation. Hence the welfare effect might be negative. This paper will be the first that sets up a framework, which helps to examine the optimal mixture of sales and innovation subsidies, where innovation costs depend on time and learning on cumulative production quantities. The process innovation can be understood as a substitute to learning. In this set up innovation subsidies are more beneficial for the monopolist, sales subsidies for consumers.
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Bibliographic InfoPaper provided by University of Munich, Department of Economics in its series Discussion Papers in Economics with number 7575.
Date of creation: 31 Oct 2008
Date of revision:
Process Innovation; Timing; Learning-by-Doing;
Find related papers by JEL classification:
- L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
- L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation
- O30 - Economic Development, Technological Change, and Growth - - Technological Change; Research and Development; Intellectual Property Rights - - - General
This paper has been announced in the following NEP Reports:
- NEP-ALL-2008-12-01 (All new papers)
- NEP-INO-2008-12-01 (Innovation)
- NEP-IPR-2008-12-01 (Intellectual Property Rights)
- NEP-MIC-2008-12-01 (Microeconomics)
- NEP-TID-2008-12-01 (Technology & Industrial Dynamics)
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