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Public Investment and Industry Incentives in Life-Science Research


  • Chenggang Wang
  • Yin Xia
  • Steven Buccola


Life-science research has shifted rapidly from the public to the private sector, raising questions about government’s remaining role. We shed light on the issue by employing a dynamic investment-response model to examine the public’s impact on industry life-science research effort and success. We find that government expenditures in both basic biological research and agricultural and medical science create substantial spillovers for private firms. The spillovers are, unfortunately, partly nullified by government competition for scarce research inputs. Yet even after accounting for such competition, public investment has been strongly complementary to private investment. Indeed, opportunities created through public research are the principal source of growth in industry life sciences. Copyright 2007, Oxford University Press.

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  • Chenggang Wang & Yin Xia & Steven Buccola, 2007. "Public Investment and Industry Incentives in Life-Science Research," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 91(2), pages 374-388.
  • Handle: RePEc:oup:ajagec:v:91:y:2007:i:2:p:374-388

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    Cited by:

    1. King, John L. & Toole, Andrew A. & Fuglie, Keith O., 2012. "The Complementary Roles of the Public and Private Sectors in U.S. Agricultural Research and Development," Economic Brief 138925, United States Department of Agriculture, Economic Research Service.

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