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Some economists argue that private firms will not undertake the efficient amount of basic scientificresearch.a. Explain why this might be so. In your answer, classify basic research in one of the categories shown in Figure 1.b. What sort of policy has the United States adopted in response to this problem?c. It is often argued that this policy increases the technological capability of American producers relative to that of foreign firms. Is this argument consistent with your classification of basic research in part (a)? ($Hint$: Can excludability apply to some potential beneficiaries of a public good and not others?)
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great question. Six ISS asking bad. Some economists argued that private firms will not undertake the fishing amount of basic scientific research. And why is this the case? Question A is asking us to classify but basic research in one of the character res in Figure one so we can see that things basic research is non rebel once you have some some useful results and then you publish it to the public. Everyone knows this, and everyone can further built their technology based on your research. So it becomes a topless good for everyone. So people under invest in this research is that everyone wants to be a free writer. They don't want to invest in research. They just want to read the results or benefits from other people's police research. That is why it is of public good and a bee question. Be what sort of policy has United States adopted in response to this problem? So one one policy is the patent law, or let's called this property right. So if you have found something in your research, you can go file a patent and are You can claim this property right so that people can not easily just free right on your results. They have to. Maybe they have to pay for your results are more were to use your method or use your model that developed. So, um, these law protect the original and developers off the basic idea or a basic in question. See, it isthe argued that this policy so that this local property right policy or the patent law has in cruise the technology could capability of American producers relative to that off foreign firms. So why is this the case? Because with this law, we can prevent people from the right and we turn this probably good into private Good. So people have this incentive to invest more end of developing new methods or fighting out new resource is So it is this incentive that drives the technology to a better of level for the United States. So this law is actually helping the development ofthe the technology capability. So is this argument consistent with our classification in question? A sew in question, a request If I This research is part of good. So if in this pot of good people were or if it is, I come the research people will not invest too much in this. Because if you must, free right. But if we have this law and turn missing two private good people were really invest in it and reach depended for themselves.
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