How to Set Budget Caps for Competitive Grants

Alessandro De Chiara and Elisabetta Iossa

No 2, GREEN Working Papers from GREEN, Centre for Research on Geography, Resources, Environment, Energy & Networks, Universita' Bocconi, Milano, Italy

Abstract: We study how funding agencies should set budget caps for competitive grants. We show that budget caps influence the researchers' submission strategy and, in particular, whether they steer their project choice towards the agencies' favorite projects, and the level of funds they request. The welfare impact of alternative approaches depends on the level of competition, the cost of public funds and the social value of project implementation.

Keywords: Competitive Grants; Procurement of Innovation; Project Choice; Research Funding; Research Tournament (search for similar items in EconPapers)
JEL-codes: D8 L2 O25 O30 O31 O38 (search for similar items in EconPapers)
Pages: 9
Date: 2019
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