Optimal R&D subsidies under technology licensing and spillover

Abstract

An optimization model for government subsidies in a R&D race considering ex ante licensing, ex post licensing as well as technology spillover is proposed in this paper. The general market equilibriums are searched for by backward induction, followed with ex ante and ex post licensing equilibriums considering technology spillover. Finally, combined with the R&D race equilibrium analysis, the equilibrium net social welfare is optimized. A numerical example is followed with the analysis about the impact of technology spillover on equilibrium consumer surplus and net social welfare. © 2012 Springer-Verlag GmbH.