Sunk costs, extensive R&D subsidies and permanent inducement effects

Pere Arqué-Castells and Pierre Mohnen

CIRANO Working Papers from CIRANO

Abstract: We study whether there is scope for using subsidies to smooth out barriers to R&D performance and expand the share of R&D firms in Spain. We consider a dynamic model with sunk entry costs in which firms' optimal participation strategy is defined in terms of two subsidy thresholds that characterise entry and continuation. We compute the subsidy thresholds from the estimates of a dynamic panel data type-2 tobit model for an unbalanced panel of about 2,000 Spanish manufacturing firms. The results suggest that extensive subsidies are a feasible and efficient tool for expanding the share of R&D firms. Est-il possible à l'aide de subsides à la recherche d'augmenter, non pas l'intensité de la recherche dans les firmes qui en font déjà, mais le nombre de firmes qui font de la recherche? Tel est l'objet de cet article. Nous élaborons un modèle dynamique avec des coûts irrécupérables dans lequel il y a deux seuils de subsides, un au-delà duquel les firmes s'engagent à faire de la recherche et un autre au-delà duquel les firmes continuent à faire de la recherche. Nous estimons ces seuils à l'aide d'un modèle tobit type II dynamique et des données d'un panel non-cylindré de 2000 firmes manufacturières espagnoles. Les résultats suggèrent que les subsides à la recherche forment un moyen efficace d'amener plus de firmes à faire de la recherche.

Keywords: R&D; persistence; subsidies; dynamic models; R&D; persistance; subventions; modèles dynamiques (search for similar items in EconPapers)
Date: 2012-04-01
New Economics Papers: this item is included in nep-com and nep-ino
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Citations: View citations in EconPapers (10)

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Related works:
Journal Article: Sunk Costs, Extensive R&D Subsidies and Permanent Inducement Effects (2015)
Working Paper: Sunk costs, extensive R&D subsidies and permanent inducement effects (2012)
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Persistent link: https://EconPapers.repec.org/RePEc:cir:cirwor:2012s-09

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