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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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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