Mostly summarized
from Gregory Mankiw’s Principles of Economics, 5th Ed.
PART 4 The Economics of the Public
Sector
Chapter 10 of 36 Externalities
Section 8 of 18
…
A potentially important type of positive externality is a “technology spillover”
This is the impact of one firm's research and production
efforts on other firms' technological advances.
Whenever a firm designs and builds a new design electric
vehicle (EV) there is some chance it will develop some new technology.
This new design EV may benefit not only this firm, but
society as a whole, because the design will become part of society's common
technological knowledge.
…
The new design has positive externalities for other
producers in the economy.
The government could attempt to maximize the benefit of this
externality by subsidizing the production of EVs.
Per Figure A, if the government paid firms a subsidy for
each EV produced the supply curve would shift down by the amount of the subsidy,
because production costs at each quantity supplied would be lower.
This shift would increase the equilibrium quantity of EVs from
Q1 to Q2
… …
Why should government subsidize development of a new
technology if the developing company could then patent new technologies it
developed?
ChatGPT:
Governments often subsidize the development of new
technologies, even if companies can patent them, because it can lead to broader
economic and societal benefits that outweigh the initial cost of subsidies.
Here are some key reasons:
Public Good and Spillover Effects:
Advanced technology often creates benefits that go beyond
the company that developed it.
These include increased productivity, job creation, and
potentially lower costs for consumers.
For example, advancements in clean energy technology not
only help the developer but also reduce carbon emissions, benefiting society at
large.
High Development Costs and Risk Reduction:
Cutting-edge technology development can be very costly and
risky, and private companies might hesitate to invest in high-risk R&D.
Subsidies help lower these risks, making it easier for
companies to pursue ambitious projects that they might otherwise avoid due to
financial concerns.
Global Competitiveness:
Governments want their countries to remain competitive in
key industries, especially in emerging sectors like AI, renewable energy, and
biotechnology.
Subsidizing R&D helps companies in these fields gain a
competitive edge, contributing to national economic strength and technological
leadership.
Innovation and Knowledge Creation:
While patents protect specific applications, the knowledge
and expertise gained during development can inspire further innovation.
As patents expire, other companies can build upon these
ideas, leading to a cascade of advancements over time that benefits the entire
industry.
Strategic Interests and Security:
In fields critical to national security (such as defense,
cybersecurity, or biotechnology), governments are especially motivated to
ensure the country has the latest technologies developed domestically, as they
may be vital for defense and infrastructure security.
Through subsidies, governments can support innovation that
leads to substantial, long-term benefits, even if patents grant companies
temporary exclusive rights to their developments.
… …
spillover effects
hakyū kōka
波及効果
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