A Theory of Private Research Funding

Karola Friedrici and Hendrik Hakenes

Hannover Economic Papers (HEP) from Leibniz Universität Hannover, Wirtschaftswissenschaftliche Fakultät

Abstract: Research can be carried out in academia, or in the private sector, or as a mixture, for example as privately funded academic research. We develop a theoretical framework in which private research funding (PRF) transfers information about the value of a research project from the private sector into academia, in an incentive compatible way. PRF dominates neither pure academia nor private research. We derive predictions about the optimal sequence of research designs, and about the optimal duration of a project within different designs. For example, PRF is never optimal if not preceded by pure academical research. We compare our results with stylized facts.

Keywords: Innovation; Research Funding; Research Finance; R\& D; Academia; University Finance. (search for similar items in EconPapers)
JEL-codes: H52 L33 O31 (search for similar items in EconPapers)
Pages: 27 pages
Date: 2011-08
New Economics Papers: this item is included in nep-cta, nep-ino, nep-ipr, nep-pr~ and nep-ppm
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Persistent link: https://EconPapers.repec.org/RePEc:han:dpaper:dp-481

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