Why does the government intervene in the market for research, especially medical research?

What will be an ideal response?


The usual justification for government involvement in research in general, and in medical research in particular, is that research and innovation create positive externalities,but much of the social value of these innovations does not accrue to the innovating firm. This means that although research has a high social value, private firms do not have an incentive to invest in costly research and development. The government steps in to subsidize research so that private firms continue to invest in research and innovation.
A-head: ECONOMICS OF HEALTH
Concept: Government intervention in health markets

Economics

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What will be an ideal response?

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a. True b. False Indicate whether the statement is true or false

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Economics