Federally supported commercial technology development: Solar thermal technologies 1970–1982

Abstract

The Federal Government has increasingly supported commercial technology development. Solar thermal technology development is one example. At least two characteristics distinguish commercial technology development from traditional federal research roles (basic R&D and public sector technology development): commercial technologies must be economically competitive; independent private R&D initiatives can be significant. These characteristics have important implications for federal participation in commercial R&D. At least two issues become important in analyzing federal programs to develop market-oriented technologies: is federal participation justified, and what federal incentives are appropriate? Federal R&D support is justified if market failures cause private and social net returns or risks to diverge. Federal R&D incentives should consider the relevant imperfections and the particular impacts of alternative incentives. The federal Solar Thermal Technology Program is similar to most public sector technology development projects. The private sector undertakes R&D using federal funds; the public sector retains responsibility for managing the R&D effort. Federally orchestrated R&D projects become increasingly dubious as technologies approach commercialization. An R&D strategy that considers the unique characteristics of commercial technology development, the market imperfections present, and the impacts of alternative incentives could help coordinate public and private interests, emphasizing the relative strengths of both sectors.