Barriers to Innovation and Subsidy Effectiveness
We explore the effects of subsidies by means of a model of firmsï¿• decisions about performing R&D when some government support can be expected. We estimate it with data on about 2,000 performing and nonperforming Spanish manufacturing firms. We compute the subsidies required to induce R&D spending,we detect the firms that would cease to perform R&D without subsidies, and assess the change in the privately financed effort. Results suggest that subsidies stimulate R&D and some firms would stop performing in their absence,b ut most actual subsidies go to firms that would have performed R&D otherwise. We find no crowding out of private funds.
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Volume (Year): 36 (2005)
Issue (Month): 4 (Winter)
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- Xulia González & Jordi Jaumandreu, .
"Threshold effects in product R&D decisions: theoretical framework and empirical analysis,"
Studies on the Spanish Economy
- Xulia González & Jordi Jaumandreu, . "Threshold effects in product R&D decisions: theoretical framework and empirical analysis," Studies on the Spanish Economy 78, FEDEA.
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- Klette, Tor Jakob & Moen, Jarle & Griliches, Zvi, 2000. "Do subsidies to commercial R&D reduce market failures? Microeconometric evaluation studies1," Research Policy, Elsevier, vol. 29(4-5), pages 471-495, April.
- Isabel Busom, 2000. "An Empirical Evaluation of The Effects of R&D Subsidies," Economics of Innovation and New Technology, Taylor & Francis Journals, vol. 9(2), pages 111-148.
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