Public Investment and Industry Incentives in Life-Science Research

Chenggang Wang, Yin Xia and Steven Buccola

American Journal of Agricultural Economics, 2009, vol. 91, issue 2, pages 374-388

Abstract: Life-science research has shifted rapidly from the public to the private sector, raising questions about government's remaining role. We shed light on the issue by employing a dynamic investment-response model to examine the public's impact on industry life-science research effort and success. We find that government expenditures in both basic biological research and agricultural and medical science create substantial spillovers for private firms. The spillovers are, unfortunately, partly nullified by government competition for scarce research inputs. Yet even after accounting for such competition, public investment has been strongly complementary to private investment. Indeed, opportunities created through public research are the principal source of growth in industry life sciences. Copyright Copyright 2008 Agricultural and Applied Economics Association.

Date: 2009

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