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The Effects of Government-Industry R&D Programs on Private R&D: The Case of the Small Business Innovation Research Program

  • Scott J. Wallsten
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    I ask whether government-industry commercial R&D grants increase private R&D. Regressing some measure of innovation on the subsidy can establish a correlation between grants and R&D, but it cannot determine whether grants increase firm R&D or whether firms that do more R&D received more grants. Using a dataset of firms involved in the Small Business Innovation Research (SBIR) program, I estimate a multi-equation model to test these hypotheses. Firms with more employees and that appear to do more research win more SBIR grants, but the grants do not affect employment. Moreover, I find evidence that the grants crowd out firm-financed R&D spending dollar for dollar.

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    Article provided by The RAND Corporation in its journal RAND Journal of Economics.

    Volume (Year): 31 (2000)
    Issue (Month): 1 (Spring)
    Pages: 82-100

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    Handle: RePEc:rje:randje:v:31:y:2000:i:spring:p:82-100
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