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Selecting Innovation Funding Mechanisms: A Framework for Policymakers

In: Entrepreneurship and Innovation Policy and the Economy, volume 6

Author

Listed:
  • Matthew Clancy
  • Matthew Esche
  • Siddhartha Haria
  • Claire McMahon
  • Christopher M. Snyder
  • Caleb Watney

Abstract

The U.S. federal government spends roughly $150 billion a year on research and development through mechanisms ranging from grants and contracts to prizes, advance market commitments, and tax credits. These funding mechanisms differ markedly in risk allocation, decision authority, and incentive power, yet policymakers have little systematic guidance for choosing among them. We develop a framework that asks the policymaker three initial questions about the contracting environment: Can they articulate the work to be done? Can they specify what would constitute a successful solution? Can they identify the most capable performers to contract with? The answers considerably narrow the set of viable mechanisms, enabling a more tractable choice of the efficient mechanism based on further considerations from the innovation-economics literature.
(This abstract was borrowed from another version of this item.)

Suggested Citation

  • Matthew Clancy & Matthew Esche & Siddhartha Haria & Claire McMahon & Christopher M. Snyder & Caleb Watney, 2026. "Selecting Innovation Funding Mechanisms: A Framework for Policymakers," NBER Chapters, in: Entrepreneurship and Innovation Policy and the Economy, volume 6, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberch:15439
    Note: IO LE POL PR
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    References listed on IDEAS

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    More about this item

    JEL classification:

    • O38 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Government Policy
    • O32 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Management of Technological Innovation and R&D
    • L52 - Industrial Organization - - Regulation and Industrial Policy - - - Industrial Policy; Sectoral Planning Methods

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