development projects. Because government spending is fueled by taxpayers, and all innovation leads to some

level of employment change, these proposals are certainly complex and challenging to implement.

This chapter deals with some of these issues: Will private companies be willing to invest in new technology? In

what ways does new technology have positive externalities? What motivates inventors? What role should

government play in encouraging research and technology? Are there certain types of goods that markets fail to

provide efficiently, and that only government can produce? What happens when consumption or production of

a product creates positive externalities? Why is it unsurprising when we overuse a common resource, like

marine fisheries?

13.1 Investments in Innovation

LEARNING OBJECTIVES

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

•

Identify the positive externalities of new technology.
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