The Cleansing Effect of R&D Subsidies

Tetsugen Haruyama

No 1425, Discussion Papers from Graduate School of Economics, Kobe University

Abstract: The paper develops a patent race model of firms which differ in R&D productivity. It is demon-strated that R&D subsidies generate the cleansing effect where relatively lower productivity firms drop out of the race and innovation accelerates due to expanded R&D investment by the remaining firms and new entrants with higher productivity than those that exit.

Keywords: Patent race; R&D; industrial policy; cleansing effect (search for similar items in EconPapers)
JEL-codes: L10 L20 L52 O32 (search for similar items in EconPapers)
Pages: 6 pages
Date: 2014-10
New Economics Papers: this item is included in nep-cse, nep-ino, nep-ipr, nep-pr~, nep-mfd and nep-sbm
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Related works:
Journal Article: THE CLEANSING EFFECT OF R&D SUBSIDIES (2018)
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