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Citation link: https://doi.org/10.26092/elib/201
00108533-1.pdf
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Knowledge transfer, transitional dynamics and optimal Research & Development policy in a dynamic monopoly setting


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Authors: Klarl, Torben  
Other Authors: Antony, Jürgen
Publisher: Institute for Economic Research and Policy (IERP) 
Abstract: 
This paper focuses on the question whether or not a reduction of the knowledge barrier is good for welfare. Based on a dynamic monopoly setting with simultaneous investment decisions in process as well as in product Research & Development (R&D), we show that a reduction of the knowledge barrier has ambiguous welfare consequences: Due to a lower knowledge barrier, product quality and welfare increase in the short-run. However, this may not necessarily be the case in the long-run. One reason is that a positive long-lasting knowledge barrier shock triggers the monopolist to sub-optimally lower its product R&D investments today and in the future at the cost of future product quality. This in turn may reduce welfare. Accordingly, to realize the first-best level of product quality, the long-run optimal R&D subsidy rate for product innovations increase with a reduction of the knowledge barrier.
Keywords: Process and product innovation; learning by doing; knowledge spillovers; optimal taxation; dynamic monopoly analysis
Issue Date: 2020
Journal/Edited collection: Bremen Papers on Economics & Innovation 
Pages: 29
Type: Artikel/Aufsatz
ISSN: 2629-3994
Secondary publication: no
DOI: 10.26092/elib/201
URN: urn:nbn:de:gbv:46-00108533-10
Institution: Universität Bremen 
Faculty: Fachbereich 07: Wirtschaftswissenschaft (FB 07) 
Institute: IERP - Institute for Economic Research and Policy 
Appears in Collections:Forschungsdokumente

  

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