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 9 of 18
…
Many economists believe government should encourage industries that create large positive technological externalities spillovers.
If making computer chips yields greater spillovers than making potato chips
government should encourage production of computer chips and not production of potato chips.
The U.S. tax code provides this encouragement with special tax incentives for research and development.
…
Government intervention in the economy that aims to promote technology-enhancing industries is called “industrial policy.”
Many economists are skeptics about industrial policy.
Even if technology spillovers exist the success of an industrial policy requires the government be able to correctly measure the size of the spillovers based on economics not politics.
Without correct and precise measurements based on economics
· the political system ends up subsidizing industries with the most political (e.g. vote gathering) attractiveness
· rather than those that yield the largest positive economic externalities spillovers
…
Patent laws protect inventors by giving them exclusive rights for their inventions for a period of time.
A patent maximizes the benefit of an externality by granting the firm a property right for its invention.
If other firms want to use the patented new technology they must obtain permission from the inventing firm, typically including paying a fee.
The patent system incentivizes firms to engage in research and other activities that advance technology to the benefit of the firm and society at large.
… …
patent laws
tokkyo-hō
特許法

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