Question

How do each of the policy proposals listed in (i) to (iv) affect the appropriability and fertility of research R&D spending in the long run, and output in the long run?

i. An international treaty that ensures that each country’s patents are legally protected all over the world.

ii. Tax credits for each dollar of R&D spending.

iii. A decrease in funding of government-sponsored conferences between universities and corporations.

iv.. The elimination of patents on breakthrough drugs, so the drugs can be sold at low cost as soon as they are available.

Answer 1

The policy proposals would have different effects on appropriability, fertility of R&D spending, and output in the long run. An international treaty for patent protection would increase appropriability and fertility, and likely lead to greater output. Tax credits for R&D spending would also increase appropriability and lead to increased output. The decrease in funding for government-sponsored conferences would have negative effects on both appropriability and fertility. The elimination of patents on breakthrough drugs would reduce appropriability but could increase fertility.

Step-by-step explanation:

The policy proposals listed would each have different effects on the appropriability and fertility of research and development (R&D) spending in the long run, as well as on output.

1. An international treaty that ensures patent protection all over the world would increase appropriability by providing legal protection for patents, encouraging R&D spending. It would also increase fertility by reducing the risk of technology being copied or stolen. Additionally, it would likely lead to an increase in long-run output by incentivizing innovation and fostering greater collaboration.
2. Tax credits for R&D spending would increase appropriability by reducing the costs of R&D and increasing the return on investment. This would incentivize companies to engage in more R&D activities and lead to increased output in the long run.
3. A decrease in funding of government-sponsored conferences between universities and corporations would likely have a negative effect on both appropriability and fertility. Without these conferences, opportunities for knowledge sharing and collaboration between academia and industry would be reduced, potentially hindering R&D spending and long-run output.
4. The elimination of patents on breakthrough drugs would reduce appropriability, as it would remove the exclusive rights to sell these drugs at high prices. This could discourage R&D spending in the long run, as companies would have less incentive to invest in developing new drugs. However, it could also increase fertility by making these drugs more affordable and accessible to a wider population.