Explain the design of a public policy that would subsidize

Assignment Help Business Economics

Reference no: EM13158773

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.

Reference no: EM13158773

Questions Cloud

Compute acidity of sample and express : Calculate acidity of sample and express in % (w/v) CH3COOH. show complete solutions and please don't cite websites or like

Find the shortest path from a to all other vertices : Find the shortest path from A to all other vertices for the following graph:

Problem related to short-term notes payable : On December 31, 2010, Irey Co. has $2,000,000 of short-term notes payable due on February 14, 2011. On January 10, 2011, Irey arranged a line of credit with County Bank which allows Irey to borrow up to $1,500,000 at one percent above the prime ra..

How many of the offspring would you expect to show : Genes A/a and B/b are linked and known to be 20 map units apart. Individuals heterozygous for both of these genes (genotypes= AB/ab) were mated with each other. If there 2000 offspring from this cross, how many of the offspring would you expect to..

Explain the design of a public policy that would subsidize : 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.

Struggle of the orders in early rome : Discuss the class struggle between the Patricians and the Plebeians and the resulting Struggle of the Orders in early Rome. What rights did the Plebeians gain through this struggle?

Comma-delimited text file : This is based on a comma-delimited text file that has already been created containing a 3 digit ID # and a first and last name. The last part of the excercise is as follows.

What kind of sons or daughters can they have : An albino, non-hemophiliac man married a normally-pigmented, non-hemopheliac women; her father was a hemophiliac and her mother was an albino. What kind of sons/daughters can they have and in what proportion?

How do public goods and private goods compare : how do public goods and private goods compare? open a supply and demand curve. in whcih direction do the shift if they both decease?

User Account

All Pages