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

Tommy H. Clausen

Structural Change and Economic Dynamics, 2009, vol. 20, issue 4, 239-253

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.

Keywords: Research; and; development; (R&D); subsidies; Innovation; Norway (search for similar items in EconPapers)
Date: 2009
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Citations: View citations in EconPapers (122)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:streco:v:20:y:2009:i:4:p:239-253

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