REGULATION OF MULTIAGENT RESEARCH-AND-DEVELOPMENT

The article focuses on the regulation problems raised by two specific characteristics of research and development: first, that it is normally desirable that several units pursue the same goal, and second, that only the best of the final products made by these units is worthwhile to society. When firms have private information, these characteristics are seen to generate a substitution effect which in some situations implies that the resources allocated to R&D under asymmetric information are excessive relative to the full-information allocation. I thus identify asymmetric information as one possible source of excessive allocations to research and development.