What is the nature of the positive externality associated with research and deve

Question

What is the nature of the positive externality associated with research and development? Firms that engage in research and development may develop more profitable products. Firms that engage in research and development may be able to lower their production costs. Research and development may lead to discoveries that make other firms more innovative. Firms that engage in research and development tend to pay higher stock dividends. What is the nature of the positive externality associated with research and development? Firms that engage in research and development may develop more profitable products. Firms that engage in research and development may be able to lower their production costs. Research and development may lead to discoveries that make other firms more innovative. Firms that engage in research and development tend to pay higher stock dividends.

Explanation / Answer

Research and development may lead to discoveries that make other firms more innovative. That how it can create positive externality.

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