Heart of darkness: modeling public-private funding interactions inside the R&D black box
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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- David, P. A., 1997.
"From market magic to calypso science policy a review of Terence Kealey's The economic laws of scientific research,"
Elsevier, vol. 26(2), pages 229-255, May.
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- 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.
- Bruno Van Pottelsberghe & Dominique Guellec, 2001. "The effectiveness of public policies in R&D," ULB Institutional Repository 2013/6225, ULB -- Universite Libre de Bruxelles.
- Stephan, Paula E., 2010. "The Economics of Science," Handbook of the Economics of Innovation, Elsevier.
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- Diamond, Arthur Jr., 2003. "Edwin Mansfield's contributions to the economics of technology," Research Policy, Elsevier, vol. 32(9), pages 1607-1617, October.
- Paul A. David, 1999. "The Political Economy of Public Science," Working Papers 99022, Stanford University, Department of Economics. Full references (including those not matched with items on IDEAS)
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