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Direct and cross scheme effects in a research and development

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  • Hottenrott, Hanna
  • Lopes-Bento, Cindy
  • Veugelers, Reinhilde

Abstract

Research and product or process development are two distinct, yet complementary innovation activities. Making use of a specific grant-based policy design that explicitly distinguishes between research projects, development projects, and mixed R&D projects, this study estimates the direct and cross scheme effects on both research and development investments of recipient firms. Positive cross scheme effects can be expected when research and development activities are complementary and financing constraints are more binding for research than for development projects. The results show that while research grants yield positive direct effects on net research spending as well as positive cross effects on development, development grants are less effective for stimulating development expenditures. The positive effect of development grants on overall R&D stems from cross effects of development grants on research expenditures. These results suggest a higher priority for subsidies targeting research projects.

Suggested Citation

  • Hottenrott, Hanna & Lopes-Bento, Cindy & Veugelers, Reinhilde, 2017. "Direct and cross scheme effects in a research and development," Research Policy, Elsevier, vol. 46(6), pages 1118-1132.
  • Handle: RePEc:eee:respol:v:46:y:2017:i:6:p:1118-1132
    DOI: 10.1016/j.respol.2017.04.004
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    References listed on IDEAS

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    Cited by:

    1. repec:pal:palcom:v:4:y:2018:i:1:d:10.1057_s41599-018-0069-9 is not listed on IDEAS
    2. Benjamin Montmartin & Marcos Herrera & Nadine Massard, 2018. "The Impact of the French Policy Mix on Business R&D: How Geography Matters," GREDEG Working Papers 2018-09, Groupe de REcherche en Droit, Economie, Gestion (GREDEG CNRS), University of Nice Sophia Antipolis.
    3. Benjamin Montmartin & Marcos Herrera & Nadine Massard, 2017. "R&D Policy regimes in France: New Evidence from a spatio-temporal Analysis," GREDEG Working Papers 2017-22, Groupe de REcherche en Droit, Economie, Gestion (GREDEG CNRS), University of Nice Sophia Antipolis.
    4. repec:eee:respol:v:47:y:2018:i:3:p:623-636 is not listed on IDEAS

    More about this item

    Keywords

    R&D; Complementarity; Research subsidies; Development subsidies; Innovation policy;

    JEL classification:

    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
    • O38 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Government Policy

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