Subsidies to Technology Adoption when Firms' Information is Endogenous

How should firms be incentivized to adopt new technologies when the technical merits and spillovers of such technologies are uncertain? We show that, when information is dispersed but exogenous, effciency can be induced with simple (constant) subsidies. When, instead, firms must also be incentivized to collect information effciently, subsidies must be conditioned on the ex-post profi tability of the new technology and, when the cost of information acquisition is unknown to the planner, on the aggregate investment in the new technology. The optimal policy has a Pigou's flavor but accounts for the non-observability of fi rms' acquisition and usage of information.