What are some Government Approaches to Encouraging Innovation?

The primary government approaches to encouraging innovation include: 

• Intellectual property - Granting intellectual property rights, a firm is able to earn monopoly profits on its product for a period of time—which offers an incentive for research and development. 
• Government Spending on Research & Development - Government spending can provide direct financial support for research and development (R&D) conducted at colleges and universities, nonprofit research entities, and sometimes by private firms, as well as at government-run laboratories. 
• Tax Breaks for Research & Development - The federal government refers to this policy as the research and experimentation (R&E) tax credit aimed at stimulating additional private sector investment. 
• Cooperative Research -  State and federal governments support research in a variety of ways. Cooperation between government-funded universities, academies, and the private sector can spur product innovation and create whole new industries.

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Related Topics

• Market Competition and Innovation
• New Technology and Positive Externalities

• Externality
• Network Externality
• Pigovian Tax
• Coase Theorem
• Agglomeration Diseconomies

• Education - Private and Social Rate of Return
• Government Approaches to Encouraging Innovation
• Public Good
• Public, Private, Club, Common Goods
• Excludable and Rivalrous Goods
• What is the Free Rider Problem for Public Goods?
• Free Rider
• Social Loafing
• Role of Government in Paying for Public Goods
• What is the Tragedy of Commons for Common Resources?
• Income Inequality
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• Poverty Trap
• Public Safety Net
• Measuring Income Inequality
• Lorenz Curve
• Ladder of Opportunity
• Tradeoff between Incentives and Income Equality