Barriers to Innovation and Subsidy Effectiveness
AbstractWe explore the effects of subsidies by means of a model of firmsï¿• decisions about performing R&D when some government support can be expected. We estimate it with data on about 2,000 performing and nonperforming Spanish manufacturing firms. We compute the subsidies required to induce R&D spending,we detect the firms that would cease to perform R&D without subsidies, and assess the change in the privately financed effort. Results suggest that subsidies stimulate R&D and some firms would stop performing in their absence,b ut most actual subsidies go to firms that would have performed R&D otherwise. We find no crowding out of private funds.
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Bibliographic InfoArticle provided by The RAND Corporation in its journal RAND Journal of Economics.
Volume (Year): 36 (2005)
Issue (Month): 4 (Winter)
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Web page: http://www.rje.org
Other versions of this item:
- Xulia González & Jordi Jaumandreu & Consuelo Pazó, 2001. "Barriers to innovation and subsidy e¤ectiveness," Working Papers 0112, Universidade de Vigo, Departamento de Economía Aplicada.
- González, X. & Jaumandreu, Jordi & Pazó, Consuelo, . "Barriers to innovation and subsidy effectiveness," Open Access publications from Universidad Carlos III de Madrid info:hdl:10016/5202, Universidad Carlos III de Madrid.
- O32 - Economic Development, Technological Change, and Growth - - Technological Change; Research and Development; Intellectual Property Rights - - - Management of Technological Innovation and R&D
- L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
- C24 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Truncated and Censored Models; Switching Regression Models
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- Klette, Tor Jakob & Moen, Jarle & Griliches, Zvi, 2000. "Do subsidies to commercial R&D reduce market failures? Microeconometric evaluation studies1," Research Policy, Elsevier, vol. 29(4-5), pages 471-495, April.
- Isabel Busom, 2000. "An Empirical Evaluation of The Effects of R&D Subsidies," Economics of Innovation and New Technology, Taylor and Francis Journals, vol. 9(2), pages 111-148.
- Nelson, Forrest D., 1977. "Censored regression models with unobserved, stochastic censoring thresholds," Journal of Econometrics, Elsevier, vol. 6(3), pages 309-327, November.
- Jaumandreu, Jordi & González, X., .
"Threshold effects in product R&D decisions: theoretical framework and empirical analysis,"
Open Access publications from Universidad Carlos III de Madrid
info:hdl:10016/5261, Universidad Carlos III de Madrid.
- Xulia González & Jordi Jaumandreu, . "Threshold effects in product R&D decisions: theoretical framework and empirical analysis," Studies on the Spanish Economy 45, FEDEA.
- Xulia González & Jordi Jaumandreu, . "Threshold effects in product R&D decisions: theoretical framework and empirical analysis," Studies on the Spanish Economy 78, FEDEA.
- Leung, Siu Fai & Yu, Shihti, 1996.
"On the choice between sample selection and two-part models,"
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Elsevier, vol. 72(1-2), pages 197-229.
- Leung, S.F. & Yu, S., 1992. "On the Choice Between Sample Selection and Two-Part Models," RCER Working Papers 337, University of Rochester - Center for Economic Research (RCER).
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