Advanced Search
MyIDEAS: Login

Subsidizing Public Inputs

Contents:

Author Info

  • Neil Buckley
  • Stuart Mestelman
  • Mohamed Shehata

Abstract

Investment in research and development may (with some probability) lead to reductions in a firm’s production cost. If the production-cost savings associated with successful research and development is freely disseminated to other firms as soon as it is realized, too few resources may be allocated to this input. In such an environment, subsidies to the public input can lead to optimal input use. Four alternative subsidy instruments are considered in this paper. Two are incremental subsidies and the others are conventional level subsidies. One of the incremental subsidies and one of the level subsidies crudely capture characteristics of incentive mechanisms used in the United States and Canada. A laboratory implementation of these instruments generally confirms that incremental subsidies are inferior to level subsidies.

Download Info

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
File URL: http://socserv.socsci.mcmaster.ca/econ/rsrch/papers/archive/99-11.pdf
Download Restriction: no

Bibliographic Info

Paper provided by McMaster University in its series Department of Economics Working Papers with number 1999-11.

as in new window
Length: 66 pages
Date of creation: Nov 1999
Date of revision:
Handle: RePEc:mcm:deptwp:1999-11

Contact details of provider:
Postal: 1280 Main Street West, Hamilton, Ontario, L8S 4M4
Phone: (905) 525-9140 ext. 22765
Fax: (905) 521-8232
Email:
Web page: http://www.economics.mcmaster.ca/
More information through EDIRC

Related research

Keywords:

Other versions of this item:

This paper has been announced in the following NEP Reports:

References

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
as in new window
  1. Davis, Jon & Quirmbach, Herman & Swenson, Charles, 1995. "Income Tax Subsidies and Research and Development Spending in a Competitive Economy: An Experimental Study," Staff General Research Papers 5215, Iowa State University, Department of Economics.
  2. Loury, Glenn C, 1979. "Market Structure and Innovation," The Quarterly Journal of Economics, MIT Press, vol. 93(3), pages 395-410, August.
  3. Offerman, Theo & Sonnemans, Joep & Schram, Arthur, 1996. "Value Orientations, Expectations and Voluntary Contributions in Public Goods," Economic Journal, Royal Economic Society, vol. 106(437), pages 817-45, July.
  4. Isaac, R. Mark & Reynolds, Stanley S., 1992. "Schumpeterian competition in experimental markets," Journal of Economic Behavior & Organization, Elsevier, vol. 17(1), pages 59-100, January.
  5. Hughes, Edward & McFetridge, D. G., 1985. "A theoretical analysis of incremental investment incentives with an application to the case of industrial R & D," Journal of Public Economics, Elsevier, vol. 27(3), pages 311-329, August.
  6. Isaac, R Mark & Reynolds, Stanley S, 1988. "Appropriability and Market Structure in a Stochastic Invention Model," The Quarterly Journal of Economics, MIT Press, vol. 103(4), pages 647-71, November.
  7. Jon Vilasuso & Mark R. Frascatore, 2000. "Public policy and R&D when research joint ventures are costly," Canadian Journal of Economics, Canadian Economics Association, vol. 33(3), pages 818-839, August.
Full references (including those not matched with items on IDEAS)

Citations

Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
as in new window

Cited by:
  1. Donja Darai & Jens Grosser & Nadja Trhal, 2009. "Patents versus Subsidies – A Laboratory Experiment," SOI - Working Papers 0905, Socioeconomic Institute - University of Zurich.
  2. John Smith, 2012. "The endogenous nature of the measurement of social preferences," Mind and Society: Cognitive Studies in Economics and Social Sciences, Fondazione Rosselli, vol. 11(2), pages 235-256, December.
  3. Smith, John, 2009. "The endogenous nature of social preferences," MPRA Paper 16599, University Library of Munich, Germany.
  4. Neil Buckley & Kenneth Chan & James Chowhan & Stuart Mestelman & Mohamed Shehata, 2001. "Value Orientations, Income and Displacement Effects, and Voluntary Contributions," Experimental Economics, Springer, vol. 4(2), pages 183-195, October.
  5. Kiridaran Kanagaretnam & Stuart Mestelman & Khalid Nainar & Mohamed Shehata, 2009. "The Impact of Social Value Orientation and Risk Attitudes on Trust and Reciprocity," Department of Economics Working Papers 2008-06, McMaster University.

Lists

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

Statistics

Access and download statistics

Corrections

When requesting a correction, please mention this item's handle: RePEc:mcm:deptwp:1999-11. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ().

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.