More on subsidizing cooperative and noncooperative R&D in duopoly with spillovers

In an earlier article in this journal I compared two R&D-stimulating policies: allowing for R&D cooperatives and providing direct R&D subsidies (see Hinloopen. 1997. Journal of Economics 66: 151-175). I also considered the implementation of both policies simultaneously. Since then Amir (1998: Discussion Paper 1/1998. Odense University) has shown that the model I used as a starting point (i.e.. that of d'Aspremont and Jacquemin, 1988: American Economic Review 78: 1133-1137) is not well-defined with respect to a crucial parameter (thr technological spillover) and subsequently proposes an augmentation of the model. Replicating then my original analysis with this augmented model reveals that all results stated before remain valid. In addition I correct a minor error in Hinloopen ( 1997) related to the comparison of optimal R&D subsidies.