Learning and Technology Adoptions in a Microeconomic Framework
A 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. An earlier innovation date will increase the price that the monopolist will charge up to that innovation date, but decrease it afterwards. 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 innovations occur through time and sales through production quantities.
Keywords: Innovation, R&D, Learning-by-Doing, Monopoly, Regulation
Phd Candidate of Economics, Faculty of Economics, University of Munich