Innovation is an example of a $[$ Select $]["$negative$",$ "positive"$]$ externality, meaning $[$ Select $]["$social costs exceed private costs", "social benefits exceed private benefits"$].$ The government can help achieve the socially optimal level of innovation through a $[$ Select $]["$subsidy$",$ "tax"$]$ where the $[$ Select $]["$subsidy $=$ the difference between social benefit and private benefit per unit", "tax $=$ the difference between social cost and private cost per unit"$].$