Abstract
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 language | English |
|---|---|
| Pages (from-to) | 172-177 |
| Number of pages | 6 |
| Journal | Managerial and Decision Economics |
| Volume | 6 |
| Issue number | 3 |
| DOIs | |
| State | Published - 1 Jan 1985 |
ASJC Scopus subject areas
- Business and International Management
- Strategy and Management
- Management Science and Operations Research
- Management of Technology and Innovation