The current paper presents a model in which public R&D stock is included as a quasi-fixed input in a variable cost function. Its price affects the long run desired level, while its shadow price indicates whether under (over) investment occurs in the short run. Two alternative R&D prices and, thus, two different longrun desired levels, are defined. One concerns the private (farmer) perspective, in which farmers express demand under the assumption of costless R&D. The other considers the societal point of view, in which the objective is the optimal public R&D supply conditioned on its cost. Application of the above model to the Italian agricultural context (1960–1995) suggests a significant difference between these private and social desired R&D levels. The latter are, on average, closer to the observed values, though over-investment has emerged since the mid-eighties.

Esposti, R., Pierani, P. (2006). Price, Private Demand and Optimal Provision of Public R&D. An Application to Italian Agriculture, 1960-1995. EMPIRICAL ECONOMICS, 31(3), 699-715 [10.1007/s00181-005-0036-3].

Price, Private Demand and Optimal Provision of Public R&D. An Application to Italian Agriculture, 1960-1995

PIERANI, PIERPAOLO
2006-01-01

Abstract

The current paper presents a model in which public R&D stock is included as a quasi-fixed input in a variable cost function. Its price affects the long run desired level, while its shadow price indicates whether under (over) investment occurs in the short run. Two alternative R&D prices and, thus, two different longrun desired levels, are defined. One concerns the private (farmer) perspective, in which farmers express demand under the assumption of costless R&D. The other considers the societal point of view, in which the objective is the optimal public R&D supply conditioned on its cost. Application of the above model to the Italian agricultural context (1960–1995) suggests a significant difference between these private and social desired R&D levels. The latter are, on average, closer to the observed values, though over-investment has emerged since the mid-eighties.
2006
Esposti, R., Pierani, P. (2006). Price, Private Demand and Optimal Provision of Public R&D. An Application to Italian Agriculture, 1960-1995. EMPIRICAL ECONOMICS, 31(3), 699-715 [10.1007/s00181-005-0036-3].
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Utilizza questo identificativo per citare o creare un link a questo documento: https://hdl.handle.net/11365/25789
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