How should firms be incentivized to invest efficiently (e.g., in AI or the supply of smart inputs) when such investments come with spillovers and their profitability depends on uncertain aggregate economic conditions? We show that firms can be encouraged to collect information and then use it in society’s best interest through a subsidy that resembles a Pigouvian correction but accounts for the non-verifiability of firms’ acquisition and usage of information.
Colombo, L. V. A., Femminis, G., Pavan, A., Investment subsidies with spillovers and endogenous private information: Why Pigou got it all right, <<JOURNAL OF ECONOMIC THEORY>>, 2026; 233 (N/A): N/A-N/A. [doi:10.1016/j.jet.2026.106160] [https://hdl.handle.net/10807/332877]
Investment subsidies with spillovers and endogenous private information: Why Pigou got it all right
Colombo, Luca Vittorio Angelo
;Femminis, Gianluca;
2026
Abstract
How should firms be incentivized to invest efficiently (e.g., in AI or the supply of smart inputs) when such investments come with spillovers and their profitability depends on uncertain aggregate economic conditions? We show that firms can be encouraged to collect information and then use it in society’s best interest through a subsidy that resembles a Pigouvian correction but accounts for the non-verifiability of firms’ acquisition and usage of information.
I documenti in IRIS sono protetti da copyright e tutti i diritti sono riservati, salvo diversa indicazione.
