Match the different externalities on the right with the government actions relat

Question

Match the different externalities on the right with the government actions related to new technologies listed on the left that may cause them. All externalities will be used, and each action may have more than one related externality. Actions Extemalities Sometimes granted too slowly Costs taxpayers Provides incentive to inventors Spreads out risks of research Sometimes granted too easily Creates temporary monopolies Reduces firms' incentives to innovate Can be politically, not scientifically, motivated Patent Government Spending Allowing ollaboration etween different ompanies

Explanation / Answer

Patent - provides incentives to investors

Create temporary monopolies

Patent is provided for the unique product or process invented.

Governement spending - costs taxpayers as this money for expenditure comes from tax revenue.

Allow collaboration - can be politically, not scientifically motivated, spreads out risk of research, reduce incentive to innovate

Collaboration joins business of different firms. They sell same product at same price after collaboration so firm lost incentive to innovate.

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