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Public gains from entrepreneurial research: Inferences about the economic value of public support of the Small Business Innovation Research program

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  • Stuart D. Allen
  • Stephen K. Layson
  • Albert N. Link

Abstract

This article presents a systematic analysis of the net economic benefits associated with the Small Business Innovation Research (SBIR) program. We offer a derivation of producer and consumer surplus to estimate economic benefits. Fundamental to the implementation of these models is a specific value of the elasticity of demand, but in its absence we estimate what its value would be when the benefit-to-cost ratio associated with public support of the SBIR program equals unity. We infer from these calculations, and from general knowledge about the ability of SBIR-funded firms to exploit their monopoly position, that the SBIR program likely generates positive net economic benefits to society. Copyright The Author 2012. Published by Oxford University Press. All rights reserved. For Permissions, please email: journals.permissions@oup.com, Oxford University Press.

Suggested Citation

  • Stuart D. Allen & Stephen K. Layson & Albert N. Link, 2012. "Public gains from entrepreneurial research: Inferences about the economic value of public support of the Small Business Innovation Research program," Research Evaluation, Oxford University Press, vol. 21(2), pages 105-112, March.
  • Handle: RePEc:oup:rseval:v:21:y:2012:i:2:p:105-112
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    File URL: http://hdl.handle.net/10.1093/reseval/rvs005
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    References listed on IDEAS

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    1. Albert N. Link & John T. Scott, 2013. "Governments as entrepreneur: Evaluating the commercialization success of SBIR projects," Chapters,in: Public Support of Innovation in Entrepreneurial Firms, chapter 2, pages 25-38 Edward Elgar Publishing.
    2. Jean Tirole, 1988. "The Theory of Industrial Organization," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262200716, January.
    3. Albert N. Link & John T. Scott, 2013. "Private Investor Participation and Commercialization Rates for Government-sponsored Research and Development: Would a Prediction Market Improve the Performance of the SBIR Programme?," Chapters,in: Public Support of Innovation in Entrepreneurial Firms, chapter 11, pages 157-174 Edward Elgar Publishing.
    4. Albert N. Link & John T. Scott, 2005. "Evaluating Public Sector R&D Programs: The Advanced Technology Program's Investment in Wavelength References for Optical Fiber Communications," The Journal of Technology Transfer, Springer, vol. 30(2_2), pages 241-251, January.
    5. Albert N. Link & John T. Scott, 2013. "Employment growth from public support of innovation in small firms," Chapters,in: Public Support of Innovation in Entrepreneurial Firms, chapter 3, pages 41-64 Edward Elgar Publishing.
    6. Albert N. Link & John T. Scott (ed.), 2011. "The Economics of Evaluation in Public Programs," Books, Edward Elgar Publishing, number 14418, April.
    7. Link, Albert N. & Scott, John T., 2011. "Public Goods, Public Gains: Calculating the Social Benefits of Public R&D," OUP Catalogue, Oxford University Press, number 9780199729685.
    8. Albert N. Link & Christopher J. Ruhm, 2013. "Bringing science to market:commercializing from NIH SBIR awards," Chapters,in: Public Support of Innovation in Entrepreneurial Firms, chapter 1, pages 3-24 Edward Elgar Publishing.
    9. H. Spencer Banzhaf, 2009. "Objective or Multi-Objective? Two Historically Competing Visions for Benefit-Cost Analysis," Land Economics, University of Wisconsin Press, vol. 85(1), pages 3-23.
    10. Albert N. Link & John T. Scott, 2013. "The theory and practice of public-sector R&D economic impact analysis," Chapters,in: Handbook on the Theory and Practice of Program Evaluation, chapter 2, pages 15-55 Edward Elgar Publishing.
    11. Michael P. Gallaher & Albert N. Link & Alan C. O’Connor, 2012. "Public Investments in Energy Technology," Books, Edward Elgar Publishing, number 14348, April.
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    Cited by:

    1. Martin S. Andersen & Jeremy W. Bray & Albert N. Link, 2017. "On the failure of scientific research: an analysis of SBIR projects funded by the U.S. National Institutes of Health," Scientometrics, Springer;Akadémiai Kiadó, vol. 112(1), pages 431-442, July.
    2. Link, Albert & Scott, John, 2017. "Toward an Assessment of the U.S. Small Business Innovation Research (SBIR) Program at the National Institutes of Health," UNCG Economics Working Papers 17-6, University of North Carolina at Greensboro, Department of Economics.

    More about this item

    JEL classification:

    • H43 - Public Economics - - Publicly Provided Goods - - - Project Evaluation; Social Discount Rate
    • O22 - Economic Development, Innovation, Technological Change, and Growth - - Development Planning and Policy - - - Project Analysis
    • 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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