Incentives and disincentives to invest in research and development Essay

Incentives and disincentives to invest in search and development - Essay ExampleA critical input for a firms triumph might be a derivative of its investments in R&D projects. For this reason, competition is one of the pristine incentives that would influence a business to invest in R&D, which is also an essential element that derriere lead to the growth and profitability of a business (Atkinson & Ezell, 2014, p. 27). In this case, apt property rights accorded to innovative entrepreneurship lead an incentive to for the investment in innovative developments. These rights contribute to the protection of a firms intellectual assets, which enhances profitability and heightens the entitys competitiveness. For instance, Gilead Sciences Inc., a pharmaceutical organisation in the United States, invested in an R&D project to develop Sovaldi (Sofosbuvir), a drug used in the treatment of Hepatitis C. This drug was introduced in the market place in December 2013 (Palmer, 2015, np). The inv ention not only improved the profitability of the firm, but it also conduct to the sustainability of the firms competitiveness in the industry. There is a possibility of addressing market failures for R&D by influencing the incentives for a private firm. In this case, addressing issues of the appropriateness of an inventions research results is possible by granting the inventor the monopoly over the intellectual property (Curci, 2010, p. 45). However, the disincentive of the appropriation relates to the risks and ambiguity of R&D investments. In this case, a firm can invest in an R&D project.