Public Procurement as a Demand-side Policy: Project Competition and Innovation Incentives

Elisabetta Iossa and Alessandro De Chiara

No 13664, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: We develop a model of project competition to compare two alternative and widely used approaches: (i) A (demand-side) procurement approach, in which the public authority specifies the type of project it will finance and (ii) a (supply-side) grant system, in which any type of project can be funded. The public authority can verify the characteristics of the projects submitted, but does not know which other projects are available. The paper sheds light on the role of public procurement to foster innovation.

Keywords: Crowding out; Innovation policy; Procurement; Research and development; Steering effect (search for similar items in EconPapers)
JEL-codes: D8 H57 L2 O31 O38 (search for similar items in EconPapers)
Date: 2019-04
New Economics Papers: this item is included in nep-ino and nep-ppm
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Citations: View citations in EconPapers (3)

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