sometimes by private firms, as well as at government-run laboratories. While government spending on

Access for free at openstax.org
13.2 • How Governments Can Encourage Innovation 315

research and development produces technology that is broadly available for firms to use, it costs taxpayers

money and can sometimes be directed more for political than for scientific or economic reasons.

LINK IT UP

Visit the NASA website (http://openstax.org/l/NASA) and the USDA website (http://openstax.org/l/USDA) to read

about government research that would not take place were it left to firms, due to the externalities.

The first column of Table 13.3 shows the sources of total U.S. spending on research and development. The

second column shows the total dollars of R&D funding by each source. The third column shows that, relative to

the total amount of funding, 22.7% comes from the federal government, about 69% of R&D is done by industry,
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