THE CLEANSING EFFECT OF R&D SUBSIDIES

Tetsugen Haruyama

Bulletin of Economic Research, 2018, vol. 70, issue 4, 452-458

Abstract: The paper develops a patent race model with a particular emphasis upon heterogeneity of competing R&D firms. It is demonstrated 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 as well as new entrants with higher productivity than exiting firms.

Date: 2018
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https://doi.org/10.1111/boer.12150

Related works:
Working Paper: The Cleansing Effect of R&D Subsidies (2014)
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