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High Tech R&D Subsidies: Estimating the Effects of Sematech

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Author Info
Douglas A. Irwin
Peter J. Klenow

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Abstract

Sparked by concerns about their shrinking market share, 14 leading U.S. semiconductor producers, with the financial assistance of the U.S. government in the form of $100 million in annual subsidies, formed a joint R&D consortium -- Sematech -- in 1987. Using Compustat data on all U.S. semiconductor firms, we estimate the effects of Sematech on members' R&D spending, profitability, investment, and productivity. In so doing we test two hypotheses: the `commitment' hypothesis that Sematech obligates member firms to spend more on high- spillover R&D, and the `sharing' hypothesis that Sematech reduces duplication of member R&D spending. Whereas the commitment hypothesis provides a rationale for the government subsidies, the sharing hypothesis does not. We find that Sematech induced members to cut their overall R&D spending on the order of $300 million per year, providing support for the sharing hypothesis.

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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 4974.

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Date of creation: Dec 1994
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Handle: RePEc:nbr:nberwo:4974

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L63 - Industrial Organization - - Industry Studies: Manufacturing - - - Microelectronics; Computers; Communications Equipment

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  1. Kamien, Morton I & Muller, Eitan & Zang, Israel, 1992. "Research Joint Ventures and R&D Cartels," American Economic Review, American Economic Association, vol. 82(5), pages 1293-306, December. [Downloadable!] (restricted)
  2. Spencer, Barbara J & Brander, James A, 1983. "International R & D Rivalry and Industrial Strategy," Review of Economic Studies, Blackwell Publishing, vol. 50(4), pages 707-22, October. [Downloadable!] (restricted)
    Other versions:
  3. Cohen, Linda, 1994. "When Can Government Subsidize Research Joint Ventures? Politics, Economics, and Limits to Technology Policy," American Economic Review, American Economic Association, vol. 84(2), pages 159-63, May. [Downloadable!] (restricted)
  4. Jovanovic, B., 1993. "The Diversification of Production," Working Papers 93-11, C.V. Starr Center for Applied Economics, New York University. [Downloadable!]
  5. Irwin, Douglas A & Klenow, Peter J, 1994. "Learning-by-Doing Spillovers in the Semiconductor Industry," Journal of Political Economy, University of Chicago Press, vol. 102(6), pages 1200-1227, December. [Downloadable!] (restricted)
  6. Reinganum, Jennifer F., 1989. "The timing of innovation: Research, development, and diffusion," Handbook of Industrial Organization, in: R. Schmalensee & R. Willig (ed.), Handbook of Industrial Organization, edition 1, volume 1, chapter 14, pages 849-908 Elsevier. [Downloadable!] (restricted)
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  1. Lööf, Hans & Heshmati, Almas, 2004. "The Impact of Public Funding on Private R&D investment: New Evidence from a Firm Level Innovation Study," Working Paper Series in Economics and Institutions of Innovation 6, Royal Institute of Technology, CESIS - Centre of Excellence for Science and Innovation Studies, revised 01 Mar 2005. [Downloadable!]
  2. Röller, Lars-Hendrik & Siebert, Ralph & Tombak, Mihkel, 2000. "Strategic Choice of Partners: Research Joint Ventures and Market Power," CEPR Discussion Papers 2617, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
  3. Jyrki Ali-Yrkkö, 2004. "Impact of Public R&D Financing on Private R&D - Does Financial Constraint Matter?," Discussion Papers 943, The Research Institute of the Finnish Economy. [Downloadable!]
  4. Kaiser, Ulrich & Licht, Georg, 1998. "R&D cooperation and R&D intensity : theory and micro-econometric evidence for german manufacturing industries," ZEW Discussion Papers 98-32, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research. [Downloadable!]
  5. José; Miguel Benavente H., 2004. "Technological Innovation In Chile Where We Are and What Can be Done," Working Papers Central Bank of Chile 295, Central Bank of Chile. [Downloadable!]
  6. Jyrki Ali-Yrkkö, 2005. "Impact of Public R&D Financing on Private R&D: Does Financial Constraint Matter?," Economics Working Papers 030, European Network of Economic Policy Research Institutes. [Downloadable!]
  7. Lars-Hendrik Röller & Mihkel M. Tombak & Ralph Siebert, 1998. "The Incentives to Form Research Joint Ventures: Theory and Evidence," CIG Working Papers FS IV 98-15, Wissenschaftszentrum Berlin (WZB), Research Unit: Competition and Innovation (CIG). [Downloadable!]
  8. Dennis W. Carlton, 1996. "A Critical Assessment of the Role of Imperfect Competition in Macroeconomics," NBER Working Papers 5782, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  9. Lee G. Branstetter & Mariko Sakakibara, 2002. "When Do Research Consortia Work Well and Why? Evidence from Japanese Panel Data," American Economic Review, American Economic Association, vol. 92(1), pages 143-159, March. [Downloadable!]
  10. Ralph Siebert & Klaus Gugler, 2004. "Market Power versus Efficiency Effects of Mergers and Research Joint Ventures: Evidence from the Semiconductor Industry," NBER Working Papers 10323, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
  11. Heshmati, Almas & Loof, Hans, 2005. "The Impact of Public Funds on Private R&D Investment: New Evidence from a Firm Level Innovation Study," Discussion Papers 11862, MTT Agrifood Research Finland. [Downloadable!]
  12. Josh Lerner, 1996. "The Government as Venture Capitalist: The Long-Run Effects of the SBIR Program," NBER Working Papers 5753, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  13. Lee Branstetter & Mariko Sakakibara, 1997. "Japanese Research Consortia: A Microeconometric Analysis of Industrial Policy," NBER Working Papers 6066, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  14. Stéphane Lhuillery, 2006. "Voluntary technological disclosure as an efficient knowledge management device: An empirical study," Economics of Innovation and New Technology, Taylor and Francis Journals, vol. 15(4-5), pages 465-491, June. [Downloadable!] (restricted)
    Other versions:
  15. Lars-Hendrik Röller & Mikhel M. Tombak & Ralph Siebert, 1997. "Why Firms Form Research Joint Ventures: Theory and Evidence," CIG Working Papers FS IV 97-06, Wissenschaftszentrum Berlin (WZB), Research Unit: Competition and Innovation (CIG), revised Oct 1997. [Downloadable!]
    Other versions:
  16. Hujer, Reinhard & Radic, Dubravko, 2005. "Evaluating the Impacts of Subsidies on Innovation Activities in Germany," ZEW Discussion Papers 05-43, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research. [Downloadable!]
  17. Paul A. Gompers & Josh Lerner, 1999. "What Drives Venture Capital Fundraising?," NBER Working Papers 6906, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  18. Masao Nakamura & Mariko Sakakibara, 2003. "Knowledge sharing in cooperative research and development," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 24(2-3), pages 117-132. [Downloadable!]
  19. Stephen Roper & Nola Hewitt-Dundas & James H Love, 2003. "An Ex Ante Evaluation Framework for the Regional Impact of Publicly Supported R&D Projects," ERSA conference papers ersa03p100, European Regional Science Association. [Downloadable!]
  20. Elizabeth Webster, 2002. "Intangible and Intellectual Capital: A Review of the Literature," Melbourne Institute Working Paper Series wp2002n10, Melbourne Institute of Applied Economic and Social Research, The University of Melbourne. [Downloadable!]
  21. Paul Gompers & Josh Lerner, 2001. "The Venture Capital Revolution," Journal of Economic Perspectives, American Economic Association, vol. 15(2), pages 145-168, Spring. [Downloadable!] (restricted)
  22. Masao Nakamura & Mariko Sakakibara & Lee Branstetter, 2003. "Measuring the impact of US research consortia," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 24(2-3), pages 51-69. [Downloadable!]
  23. Kangasharju, Aki & Venetoklis, Takis, 2002. "Effect of business subsidies on labour demand: overall evaluation with regional extensions," ERSA conference papers ersa02p172, European Regional Science Association. [Downloadable!]
  24. Marín Uribe, Pedro Luis & Siotis, Georges, 2002. "Public Policies Towards Research Joint Venture Formation: Designs and Outcomes," CEPR Discussion Papers 3772, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
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