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  • Positive Externalities: Social vs. Private Benefit

Underinvestment in R&D as a Positive Externality

A firm's investment in research and development (R&D) can generate positive externalities when the knowledge gained benefits other firms or society as a whole. [9, 15] Since the innovating firm cannot capture the full value of these widespread benefits (known as knowledge spillovers), its private incentive to invest is less than the total social benefit, leading to underinvestment in R&D from a societal perspective. [7, 13, 14]

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Social Science

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CORE Econ

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Economics

Introduction to Microeconomics Course

The Economy 2.0 Microeconomics @ CORE Econ

Ch.10 Market successes and failures: The societal effects of private decisions - The Economy 2.0 Microeconomics @ CORE Econ

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