Government Support of Technical Progress: Lessons from History

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Abstract
In the past, the U.S. government has been involved in various programs to support technical progress. The record of such programs in seven industries offers important guidelines. The economist's usual presumption that government support for such activities should be concentrated on those cases in which there is palpable market failure proves much too simple. Programs that stand the best chance of success are those in which the government itself is a dominant customer for the product concerned, those that do not require the government to determine what the commercial market wants, and those that do not directly threaten the relative position of competing firms in the industry. Some of the most successful programs have been positioned between basic research on the one hand and commercial application on the other.

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