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D) have determined that an investment program to… Show mor

Paper help Economics D) have determined that an investment program to… Show mor

Economics

D) have determined that an investment program to… Show mor

D) have determined that an investment program to… Show more Experts in agricultural research and development (R&D) have determined that an investment program to develop an alternative pesticide technology that would achieve the productivity gains without causing the negative externalities would cost $50 million dollars and result in social benefits of $10 million dollars annually in perpetuity. The $50 million R&D investment program would be performed by a consortium of private firms. However, because of spillovers, the private benefits appropriated by the consortium would be only $3 million annually in perpetuity. The private and social required rates of return (hurdle rates) are the same and equal 10%. a. Is the R&D investment program socially beneficial? Explain. Will the private sector undertake the R&D in the absence of public support? Explain. b. Explain the design of a public policy that would subsidize the private performance of the R&D (to ensure that the research is done by the private sector) yet would minimize the public funds used. • Show less

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