Search

Public firms invest more in research and development (R & D) than private firms under a mixed R & D duopoly wherein product introduction is governed by uncertainty and easy imitation. Private firms manifest less R & D investment with respect to a private duopoly while public firms concurrently invest more in R & D. Moreover, in a mixed duopoly, private firms underinvest in R & D while public firms overinvest. Nonetheless, private and mixed duopolies cannot be compared explicitly in terms of social welfare.

Research and development (R and D) concerning preventive goods and services continues to experience underinvestment coming from the government and from the private sector. Underinvestment results due to efforts of each countries to free-ride off research conducted in other places. Lack of political support and existence of several financially constrained R and D companies also contribute to underinvestment.

Inventors who have strong career patent histories have a higher probability of being linked to organized research, according to a study using a model that implies there is a greater incentive for the most inventive to become involved in organized research. The study uses the hypothesis that it is difficult to make a profit from basic knowledge, and this is an incentive for researchers to set up such organizations. The contractual choice of researchers thus has an impact on the amount of research done.