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Public Policy and Venture Capital Backed Innovation

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  • Christian Keuschnigg

Abstract

This paper discusses the role of public policy towards the venture capital industry. The model emphasizes four margins: supply of entrepreneurs due to career choice, entry of venture capital funds and search for investment opportunities, entrepreneurial effort and venture capital advice during the start-up period, and introduction of new goods by successful start-ups. The paper considers short- and long-run comparative static and welfare effects of policy reform with regard to capital gains taxation, innovation subsidies, public R&D spending and other policy initiatives.

Suggested Citation

  • Christian Keuschnigg, 2003. "Public Policy and Venture Capital Backed Innovation," CESifo Working Paper Series 1066, CESifo Group Munich.
  • Handle: RePEc:ces:ceswps:_1066
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    File URL: http://www.cesifo-group.de/DocDL/cesifo1_wp1066.pdf
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    References listed on IDEAS

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    Cited by:

    1. Douglas Cumming, 2005. "Review Essay: Global Venture Capital Transactions," Venture Capital, Taylor & Francis Journals, vol. 7(2), pages 185-201, January.
    2. Douglas Cumming & Sofia Johan, 2006. "Provincial preferences in private equity," Financial Markets and Portfolio Management, Springer;Swiss Society for Financial Market Research, vol. 20(4), pages 369-398, December.
    3. Andy Cosh & Douglas Cumming & Alan Hughes, 2009. "Outside Enterpreneurial Capital," Economic Journal, Royal Economic Society, vol. 119(540), pages 1494-1533, October.
    4. Cumming, D. & Johan, S.A., 2005. "Is it the law or the lawyers? Investment fund covenants," Discussion Paper 2005-005, Tilburg University, Tilburg Law and Economic Center.
    5. Sofia Johan & Dorra Najar, 2011. "The Role of Law, Corruption and Culture in Investment Fund Manager Fees," Post-Print halshs-00639925, HAL.
    6. Douglas Cumming & Sofia Johan, 2008. "Legality and venture capital fund manager compensation," Venture Capital, Taylor & Francis Journals, vol. 11(1), pages 23-54, June.
    7. Cumming, Douglas & Dai, Na, 2010. "Local bias in venture capital investments," Journal of Empirical Finance, Elsevier, vol. 17(3), pages 362-380, June.
    8. Douglas Cumming & Sofia Johan, 2007. "Advice and monitoring in venture finance," Financial Markets and Portfolio Management, Springer;Swiss Society for Financial Market Research, vol. 21(1), pages 3-43, March.
    9. repec:dau:papers:123456789/5830 is not listed on IDEAS
    10. Cumming, Douglas & Fleming, Grant & Schwienbacher, Armin, 2006. "Legality and venture capital exits," Journal of Corporate Finance, Elsevier, vol. 12(2), pages 214-245, January.

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    Keywords

    innovation; venture capital; double moral hazard; public policy;

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