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Do subsidies have positive impacts on R&D and innovation activities at the firm level?

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  • Tommy Clausen

    (Centre for Technology, Innovation and Culture, University of Oslo)

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    Abstract

    In 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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    File URL: http://www.tik.uio.no/InnoWP/Clausen%202007%20subsidies.pdf
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    Bibliographic Info

    Paper provided by Centre for Technology, Innovation and Culture, University of Oslo in its series Working Papers on Innovation Studies with number 20070615.

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    Length: 36 pages
    Date of creation: Nov 2008
    Date of revision:
    Handle: RePEc:tik:inowpp:20070615

    Note: This is an updated version (November 2008) of the same paper published earlier as TIK working paper on 15.6.2007 (No. 20070615)
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    Web page: http://www.tik.uio.no/Innovation
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    5. 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.
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    Cited by:
    1. Fulvio Castellacci, 2007. "Innovation in Norway in a European Perspective," Working Papers on Innovation Studies 20070609, Centre for Technology, Innovation and Culture, University of Oslo.

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