Do subsidies have positive impacts on R&D and innovation activities at the firm level?

Tommy Clausen
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Tommy Clausen: Centre for Technology, Innovation and Culture, University of Oslo

No 20070615, Working Papers on Innovation Studies from Centre for Technology, Innovation and Culture, University of Oslo

Abstract: In this paper we analyze whether and how “research” and “development” subsidies influence private R&D activity. Our empirical results show that “research” subsidies stimulate R&D spending within firms while “development” subsidies substitute such spending. At the theoretical level we find empirical support for the market failure argument that private R&D expenditure is best stimulated in areas where the gap between the social and the private rate of return to R&D is high. A policy implication is that technology programs should support research projects in the private sector in order to stimulate to more R&D.

Pages: 36 pages
Date: 2008-11
New Economics Papers: this item is included in nep-ino, nep-mic and nep-ppm
Note: This is an updated version (November 2008) of the same paper published earlier as TIK working paper on 15.6.2007 (No. 20070615)
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Citations: View citations in EconPapers (7)

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Persistent link: https://EconPapers.repec.org/RePEc:tik:inowpp:20070615

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