Do Subsidies to Commercial R&D Reduce Market Failures - Microeconomic Evaluation Studies?
AbstractA number of market failures have been associated with R&D investments and significant amounts of public money have been spent on program to stimulate innovative activities. In this paper, we review some recent microeconometric studies evaluating effects of government sponsored commercial R&D. We pay particular attention to the conceptual problems involved. Neither the firms receiving support, nor those not applying, can be considered random draws. Furthermore, those not receiving support are often affected by the programs, and spillover effects are often a main justification for R&D subsidies. Constructing a valid control group under these circumstances is challenging, and we relate our discussion to recent advances in econometric methods for evaluation studies based on non-experimental data. We also discuss some analytical questions that need to be addressed in order to assess whether R&D support schemes can be justified. For instance, what are the implications of firms' R&D investments being complementary to each other and to what extent are potential R&D spillovers internalized in the market?
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Bibliographic InfoPaper provided by Harvard - Institute of Economic Research in its series Harvard Institute of Economic Research Working Papers with number 1861.
Date of creation: 1999
Date of revision:
Other versions of this item:
- Tor Jakob Klette & Jarle Møen & Zvi Griliches, 1999. "Do Subsidies to Commercial R&D Reduce Market Failures? Microeconomic Evaluation Studies," NBER Working Papers 6947, National Bureau of Economic Research, Inc.
- G30 - Financial Economics - - Corporate Finance and Governance - - - General
- O40 - Economic Development, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General
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