This award funds research on two projects in economic theory. The first examines how a monopolist will choose prices over time, with a focus on how monopoly power in the product market affects how the firm makes decisions over time about production technologies. The second project is in the general area of mechanism design, the design of methods to allocate recourses. The specific application is in matching markets under incomplete information, and the work could give us new ideas about how to design allocation methods that will lead to stable outcomes.
Government subsidies to support innovation in firms are a widespread policy. However, little is known about their effectiveness to promote technological upgrading and boost firm performance in developing countries. The existing rigorous studies about this type of intervention are focused on developed countries and high-tech industries, and infer technological improvement from patents and R&D expenditure.
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