R&D Cost Allocation with Endogenous Technology Adoption

What are the welfare economic consequences of alternative methods of assigning research and development costs among technology producers and users?2 We analyze this question, abstracting away from many of the institutional details which exist in a specific business environment and which may be important. Specifically, by means of a general theoretical model, we examine R&D cost assignments to a public utility and its customers which have the most favourable impact on aggregate welfare and consumer surplus.