Selective R&D subsidies and firms’ application strategies

Yahui Sun and Shougui Luo

Applied Economics Letters, 2022, vol. 29, issue 11, 979-982

Abstract: ‘Picking-the-winners’ selective R&D subsidies are provided to a few firms with high innovation capabilities. Thus, the applicants for subsidies might send misleading signals to stand out from others. This paper explores firms’ application strategies and finds that firms tend to increase the quantity of their R&D outputs as a signal of being highly innovative, even at the expense of reducing innovation quality.

Date: 2022
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DOI: 10.1080/13504851.2021.1904100

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