environmental and societal front at least, ICT has offered a wealth of opportunities and externalities.

13.2 How Governments Can Encourage Innovation

LEARNING OBJECTIVES

By the end of this section, you will be able to:

• Explain the effects of intellectual property rights on social and private rates of return.

•

Identify three U.S. Government policies and explain how they encourage innovation

A number of different government policies can increase the incentives to innovate, including: guaranteeing

intellectual property rights, government assistance with the costs of research and development, and

cooperative research ventures between universities and companies.

Intellectual Property Rights

One way to increase new technology is to guarantee the innovator an exclusive right to that new product or

process. Intellectual property rights include patents, which give the inventor the exclusive legal right to make,
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