 The effect of public subsidies on corporate R&D investment: An application of the generalized propensity scoreXiaoyong Dai and Liwei Cheng Technological Forecasting and Social Change, 2015, vol. 90, issue PB, 410-419 Abstract: This paper aims to investigate how the effect of public subsidies on corporate R&D investment varies with different levels of public subsidies. Based on the generalized propensity score methodology, we estimate a dose–response function, using a large sample of Chinese manufacturing firms. Our results suggest public subsidies follow an S-shaped relationship and inverted-U correlation with the firm's total R&D and private R&D investment, respectively. There is a saturation point beyond which a further increase in public subsidies does not yield an increase of firm's total R&D investment. A minimum threshold value of public subsidies is required to induce the firm's private R&D spending. There are also critical values beyond which a further increase in public subsidies would partially or completely crowd out a firm's private R&D investment. Our conclusion implies the existence of an optimal interval of subsidy, and thus could help to improve the efficiency of public subsidies. Keywords: Public subsidies; R&D investment; Generalized propensity score (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:tefoso:v:90:y:2015:i:pb:p:410-419 DOI: 10.1016/j.techfore.2014.04.014 Access Statistics for this article Technological Forecasting and Social Change is currently edited by Fred Phillips More articles in Technological Forecasting and Social Change from Elsevier |
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