Incentives and disincentives to invest in research and development Essay

Incentives and disincentives to seat in research and development - Essay ExampleA critical input for a firms success might be a derivative of its robements in R&D projects. For this reason, competition is one of the primary incentives that would influence a business to invest in R&D, which is also an essential element that can lead to the growth and profitability of a business (Atkinson & Ezell, 2014, p. 27). In this case, intellectual property rights accorded to innovational entrepreneurship provide 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 pharmaceutic 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 in December 2013 (Palmer, 2015, np). The invention not only improved the profitability of the firm, but it also led 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 come-at-able 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.