Answer to Question #275391 in Macroeconomics for kay

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

i) This proposal would probably lead to lower growth in poorer countries, at least for a while, but higher growth in rich countries.

ii) This proposal would lead to an increase in R&D spending. If fertility did not fall, there would be an increase in the rates of technological progress and output growth.

iii) Presumably, this proposal would lead to a (small) decrease in the fertility of applied research and therefore to a (small) decrease in growth.

iv) This proposal would reduce the appropriability of drug research. presumably, there would be a reduction in R&D spending on new drugs, a reduction in the rate of technological progress, and the reduction in the growth rate.