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The role of public intervention in R & D
Author(s) -
Finger Nachum,
Mehrez Abraham
Publication year - 1985
Publication title -
managerial and decision economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.288
H-Index - 51
eISSN - 1099-1468
pISSN - 0143-6570
DOI - 10.1002/mde.4090060309
Subject(s) - decision maker , intervention (counseling) , a priori and a posteriori , set (abstract data type) , private information retrieval , economic interventionism , government (linguistics) , microeconomics , economics , business , public economics , actuarial science , computer science , management science , political science , psychology , philosophy , linguistics , computer security , epistemology , psychiatry , politics , law , programming language
The purpose of this paper is threefold: (1) we emphasize the rule of uncertainty in achieving an efficient allocation of resources to R & D activities; (2) we identify and discuss optional mechanisms that are directed at minimizing the role of uncertainty in determining R & D decisions; and (3) we analyze the role of public intervention in R & D via a formal structure. More specifically, we explain why and under what conditions a risk‐averse decision‐maker will invest less than a government in research and inventive activities. Sufficient conditions that lead to private underinvestment in these activities are established. Furthermore, if the option of buying information exists, then we identify a set of private governmental contracts that may lead to the acceptance of a research project that a priori is unfeasible.