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Heart of Darkness: Modeling Public-Private Funding Interactions Inside the R&D Black Box

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Author Info
Paul A. David and Bronwyn H. Hall.

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Abstract

Paul A. David and Bronwyn H. Hall.
JEL#: H41, H42, O31, O38
Keywords: R&D, public goods, crowding out, spillovers, supply of scientists and engineers.
This paper is a first step toward closing the analytical gap in the extensive literature on the results of interactions between public and private R&D expenditures, and their joint effects on the economy. Econometric studies in this area report a plethora of sometimes confusing and frequently contradictory estimates of the response of company financed R&D to changes in the level and nature of public R&D expenditure, but the necessary theoretical framework within which the empirical results can be interpreted is seldom provided. A major cause of "inconsistencies" in the empirical literature is the failure to recognize key differences among the various policy "experiments" being considered - depending upon the economy in which they are embedded, and the type of public sector R&D spending that is contemplated. Using a simple, stylized structural model, we identify the main channels of impact of public R&D. We thus can characterize the various effects, distinguishing between short-run and long-run impacts that would show up in simple regression analyses of nominal public and private R&Dexpenditure variables. Within the context of our simple model it is possible to offer interpretations that shed light on recent cross-section and panel data findings at both high (i.e. national) and low (specific technology area) levels of aggregation.
May 2000

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Paper provided by University of California at Berkeley in its series Economics Working Papers with number E00-275.

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Date of creation: 01 May 2000
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Handle: RePEc:ucb:calbwp:e00-275

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  1. Charles I. Jones & John C. Williams, . "Measuring the Social Return to R&D," Working Papers 97002, Stanford University, Department of Economics. [Downloadable!]
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  2. David, P. A., 1997. "From market magic to calypso science policy a review of Terence Kealey's The economic laws of scientific research," Research Policy, Elsevier, vol. 26(2), pages 229-255, May. [Downloadable!] (restricted)
    Other versions:
  3. Austan Goolsbee, 1998. "Does Government R&D Policy Mainly Benefit Scientists and Engineers?," NBER Working Papers 6532, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
  4. Leyden, Dennis Patrick & Link, Albert N, 1991. "Why Are Government R&D and Private R&D Complements?," Applied Economics, Taylor and Francis Journals, vol. 23(10), pages 1673-81, October.
  5. Cohen, Wesley M & Levinthal, Daniel A, 1989. "Innovation and Learning: The Two Faces of R&D," Economic Journal, Royal Economic Society, vol. 99(397), pages 569-96, September. [Downloadable!] (restricted)
  6. Paul A. David, 1999. "The Political Economy of Public Science," Working Papers 99022, Stanford University, Department of Economics. [Downloadable!]
  7. Paula E. Stephan, 1996. "The Economics of Science," Journal of Economic Literature, American Economic Association, vol. 34(3), pages 1199-1235, September. [Downloadable!] (restricted)
  8. Robin Cowan & Paul A. David & Dominique Foray, 1999. "The Explicit Economics of Knowledge Codification and Tacitness," Working Papers 99027, Stanford University, Department of Economics. [Downloadable!]
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  9. Bergstrom, Theodore & Blume, Lawrence & Varian, Hal, 1986. "On the private provision of public goods," Journal of Public Economics, Elsevier, vol. 29(1), pages 25-49, February. [Downloadable!] (restricted)
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  10. Diamond, Arthur Jr., 2003. "Edwin Mansfield's contributions to the economics of technology," Research Policy, Elsevier, vol. 32(9), pages 1607-1617, October. [Downloadable!] (restricted)
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(explanations, 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.)

  1. Wang, Chenggang & Xia, Yin & Shoemaker, Robbin & Buccola, Steven, 2006. "Public Investment Policy in Life-Science Research," 2006 Annual meeting, July 23-26, Long Beach, CA 21330, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association). [Downloadable!]
  2. Joshua S. Gans & Scott Stern, 2000. "When Does Funding Research by Smaller Firms Bear Fruit?: Evidence from the SBIR Program," NBER Working Papers 7877, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
  3. repec:mop:credwp:05.07.59 is not listed on IDEAS
  4. Maria Fuensanta Morales, 2001. "Research Policy and Endogenous Growth," UFAE and IAE Working Papers 488.01, Unitat de Fonaments de l'Anàlisi Econòmica (UAB) and Institut d'Anàlisi Econòmica (CSIC). [Downloadable!]
  5. Cerulli Giovanni, 2008. "Modelling and measuring the effects of public subsidies on business R&D: theoretical and econometric issues," CERIS Working Paper 200803, Institute for Economic Research on Firms and Growth - Moncalieri (TO). [Downloadable!]
  6. Manuel Trajtenberg, 2000. "R&D Policy in Israel: An Overview and Reassessment," NBER Working Papers 7930, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  7. Nicola Lacetera, 2003. "Incentives and spillovers in R&D activities: an agency-theoretic analysis of industry-university relations," Microeconomics 0312004, EconWPA. [Downloadable!]
  8. 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!]
  9. Anders Sorensen & Hans Christian Kongsted & Mats Marcusson, 2003. "R&D, Public Innovation Policy, And Productivity: The Case Of Danish Manufacturing," Economics of Innovation and New Technology, Taylor and Francis Journals, vol. 12(2), pages 163-178, January. [Downloadable!] (restricted)
  10. Gray, Richard & Malla, Stavroula & Tran, Kien, 2003. "An Empirical Analysis Of Public And Private Spillovers Within The Canola Biotech Industry," 2003 Annual meeting, July 27-30, Montreal, Canada 22137, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association). [Downloadable!]
  11. Toole, Andrew A., 2005. "Does Public Scientific Research Complement Industry R&D Investment? The Case of NIH Supported Basic and Clinical Research and Pharmaceutical Industry R&D," ZEW Discussion Papers 05-75, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research. [Downloadable!]
  12. Tommy Clausen, 2007. "Access (not) granted: What kinds of firms participate in technology programs?," Working Papers on Innovation Studies 20070612, Centre for Technology, Innovation and Culture, University of Oslo. [Downloadable!]
  13. Christoph Grimpe & Ulrich Kaiser, 2008. "Gains and Pains from Contract Research: A Transaction and Firm-level Perspective," CIE Discussion Papers 2008-01, University of Copenhagen. Department of Economics. Centre for Industrial Economics. [Downloadable!]
    Other versions:
  14. Tommy Clausen, 2008. "Do subsidies have positive impacts on R&D and innovation activities at the firm level?," Working Papers on Innovation Studies 20070615, Centre for Technology, Innovation and Culture, University of Oslo. [Downloadable!]
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