Template-Type: ReDIF-Paper 1.0


Author-Name: Luca Colombo
Author-X-Name-First: Luca
Author-X-Name-Last: Colombo
Author-Email: luca.colombo@unicatt.it
Author-Workplace-Name: Università Cattolica del Sacro Cuore
Author-Workplace-Name: Dipartimento di Economia e Finanza, Università Cattolica del Sacro Cuore

Author-Name: Gianluca Femminis
Author-X-Name-First: Gianluca
Author-X-Name-Last: Femminis
Author-Email: gianluca.femminis@unicatt.it
Author-Workplace-Name: Università Cattolica del Sacro Cuore
Author-Workplace-Name: Dipartimento di Economia e Finanza, Università Cattolica del Sacro Cuore

Author-Name: Alessandro Pavan
Author-X-Name-First: Alessandro
Author-X-Name-Last: Pavan


Title: Subsidies to Technology Adoption when Firms'Information is Endogenous.


Abstract: How should firms be incentivized to adopt new technologies when the technical merits and
spillovers of such technologies are uncertain? We show that, when information is dispersed but
exogenous, eciency can be induced with simple (constant) subsidies. When, instead, firms must
also be incentivized to collect information eciently, subsidies must be conditioned on the ex-post
profitability of the new technology and, when the cost of information acquisition is unknown to
the planner, on the aggregate investment in the new technology. The optimal policy has a Pigou's 
flavor but accounts for the non-observability of firms' acquisition and usage of information. 
Length: 45
Creation-Date: 2023-01
File-URL: http://dipartimenti.unicatt.it/economia-finanza-def125.pdf
File-Format: Application/pdf
File-Function: First version, 2023
Number: def125
Classification-JEL: D21, D62, D83. 
Keywords: endogenous information, investment spillovers, optimal policy, welfare.
Handle: RePEc:ctc:serie1:def125