Government mandated technology transfers from the developer of a product to a second source offer a potential gain of reduced information rents and procurement costs. To provide appropriate incentives, technology must sometimes be transferred even when the second source is less efficient than...

We offer a rational expectations model of the dynamics of innovative industries. The fundamental value of innovations is uncertain and one must learn whether they are solid or fragile. Also, when the industry is new, it is difficult to monitor managers and make sure they exert the effort...