Most governments heavily subsidise R&D (which is equivalent to a deliberate negative externality), often through tax credits
The patent system allows companies to extract abnormal profits for 20 years and incentivise a race (even if somebody independently develops the technology, they can’t use it if somebody else has patented it). This system is a deliberate inefficient market
Corporate R&D tends to be much more short-term and customer-focused. If you come from an academic background, you will be shocked by what is counted as R&D. For example, if you ask a consumer products company about innovation, they will talk about things that really aren’t humanity advancing (e.g. adding another blade to a razor, changing the shape of a chocolate bar to make it smaller without the consumer noticing)
My two cents:
Most governments heavily subsidise R&D (which is equivalent to a deliberate negative externality), often through tax credits
The patent system allows companies to extract abnormal profits for 20 years and incentivise a race (even if somebody independently develops the technology, they can’t use it if somebody else has patented it). This system is a deliberate inefficient market
Corporate R&D tends to be much more short-term and customer-focused. If you come from an academic background, you will be shocked by what is counted as R&D. For example, if you ask a consumer products company about innovation, they will talk about things that really aren’t humanity advancing (e.g. adding another blade to a razor, changing the shape of a chocolate bar to make it smaller without the consumer noticing)