Positive Externalities
Positive Externalities
For example, when a company develops and commercializes a new technology, other companies can also use part of that technology and create further innovation. Therefore, in terms of Research and development investment, the marginal benefit to society as a whole is greater than the marginal benefit to each individual company. It is reasonable to consider that research and development investment is set so that the marginal cost and marginal benefit of each company are equal as long as the company is solving the problem of maximizing individual profits. As a result, the level of research and development investment may be lower than the socially desirable level.