We show that the presumed incompatibility of uncoordinated R&D and competition is not fundamental, but hinges on the nature of R&D spillovers. As a consequence, R&D subsidies may be more effective than previously thought.

A warm-glow motivation for charitable giving has recently been explored as a possible solution to the problem of inefficient private provision of public goods. However, the introduction of warm-glow affects both the efficient level of public good provision as well as the equilibrium level. Hence...

We show that the presumed incompatibility of uncoordinated R&D and competition is not fundamental, but hinges on the nature of R&D spillovers. As a consequence, R&D subsidies may be more effective than previously thought.