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An increase in R&D induced by, say, government subsidies could result in a higher rate of product obsolescence, with new products replacing older ones at a faster rate. How does this "side-effect" of the subsidies affect firms' incentives to invest in research? (Hint: distinguish between firms with and without market power.)

Microeconomics, Economics

  • Category:- Microeconomics
  • Reference No.:- M91234482

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