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Selective R&D subsidies and firms’ application strategies

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  • Yahui Sun
  • Shougui Luo

Abstract

‘Picking-the-winners’ selective R&D subsidies are provided to a few firms with high innovation capabilities. Thus, the applicants for subsidies might send misleading signals to stand out from others. This paper explores firms’ application strategies and finds that firms tend to increase the quantity of their R&D outputs as a signal of being highly innovative, even at the expense of reducing innovation quality.

Suggested Citation

  • Yahui Sun & Shougui Luo, 2022. "Selective R&D subsidies and firms’ application strategies," Applied Economics Letters, Taylor & Francis Journals, vol. 29(11), pages 979-982, June.
    • Handle: RePEc:taf:apeclt:v:29:y:2022:i:11:p:979-982
    DOI: 10.1080/13504851.2021.1904100
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