Do subsidies have positive impacts on R&D and innovation activities at the firm level?
AbstractIn 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.
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Bibliographic InfoArticle provided by Elsevier in its journal Structural Change and Economic Dynamics.
Volume (Year): 20 (2009)
Issue (Month): 4 (December)
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Web page: http://www.elsevier.com/locate/inca/525148
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