Public subsidies and cooperation in research and development: Evidence from the lab

Antonio Acconcia, Sergio Beraldo, Carlo Capuano and Marco Stimolo

EERI Research Paper Series from Economics and Econometrics Research Institute (EERI), Brussels

Abstract: We implement an experimental design based on a duopoly game in which subjects choose whether to cooperate in Research and Development (R&D) activities. We first conduct six experimental markets that differ in both the levels of knowledge spillovers and the intensity of competition. Consistently with the theory, we find that the probability of cooperation increases in the level of spillovers and decreases in that of market competition. We then replicate the experimental markets by providing subsidies to subjects who cooperate. Subsidies relevantly increase the probability of cooperation in focus markets, causing, however, a sensible reduction of R&D investments. Overall, our evidence suggests that, depending on the characteristics of the market, the use of public subsidies might be redundant, for firms would anyway joined their R&D efforts; or counterproductive, inducing firms to significantly reduce R&D investments compared to the non-cooperative scenario.

Keywords: Cooperation in R&D; Public subsidies; knowledge spillovers; market competition. (search for similar items in EconPapers)
JEL-codes: L24 O3 (search for similar items in EconPapers)
Date: 2022-03-04
New Economics Papers: this item is included in nep-exp, nep-ino, nep-sbm and nep-tid
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http://www.eeri.eu/documents/wp/EERI_RP_2022_04.pdf (application/pdf)

Related works:
Journal Article: Public Subsidies and Cooperation in Research and Development. Evidence from the LAB (2023)
Working Paper: Public subsidies and cooperation in research and development. Evidence from the lab (2022)
Working Paper: Public subsidies and cooperation in research and development. Evidence from the lab (2022)
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Persistent link: https://EconPapers.repec.org/RePEc:eei:rpaper:eeri_rp_2022_04

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