The role of public intervention in R & D

Nachum Finger, Abraham Mehrez

Research output: Contribution to journalArticlepeer-review

1 Scopus citations


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.

Original languageEnglish
Pages (from-to)172-177
Number of pages6
JournalManagerial and Decision Economics
Issue number3
StatePublished - 1 Jan 1985

ASJC Scopus subject areas

  • Business and International Management
  • Strategy and Management
  • Management Science and Operations Research
  • Management of Technology and Innovation


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