The politics of commercial R&D programs

Abstract

The Selection and management of commercial research and J. development projects differ between the public and private sectors in two important respects. One is the inclusiveness of the economic effects considered in evaluating a project. Private decisions are largely motivated by prospective profitability, whereas a wider array of social benefits and costs are relevant in the public sector. Specifically, public decisions would normally take into account economic benefits accruing to parties other than the innovating firm (such as competitive copiers of the technology and the customers of the industry), as well as any external costs from adopting the innovation (such as increased environmental pollution).