Given the severe externality problems associated with basic research, governments rather than private firms tend to finance such research.

Question

Quizplus · Accepted Answer

Basic research often has long-term benefits that cannot be fully captured by private firms, leading to market failure. Governments, on the other hand, have a greater ability to fund and incentivize basic research, as they can account for the positive externalities generated by the research.

Given the Severe Externality Problems Associated with Basic Research, Governments