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A Theoretical Analysis of Public Funding for Research

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  • De Fraja, Gianni

Abstract

This paper studies government funding for scientific research. Funds must be distributed among different research institutions and allocated between basic and applied research. Informational constraints prevent less productive institutions to be given any government funding. In order to internalise the beneficial effects of research, the government requires the most productive institutions to carry out more applied research than they would like. Funding for basic research is used by the government to induce more productive institutions to carry out more applied research than they would like.

Suggested Citation

  • De Fraja, Gianni, 2011. "A Theoretical Analysis of Public Funding for Research," CEPR Discussion Papers 8442, C.E.P.R. Discussion Papers.
  • Handle: RePEc:cpr:ceprdp:8442
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    References listed on IDEAS

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    7. Gersbach, Hans & Schneider, Maik & Schneller, Olivier, 2010. "Optimal Mix of Applied and Basic Research, Distance to Frontier, and Openness," CEPR Discussion Papers 7795, C.E.P.R. Discussion Papers.
    8. Macho-Stadler, Ines & Perez-Castrillo, David & Veugelers, Reinhilde, 2007. "Licensing of university inventions: The role of a technology transfer office," International Journal of Industrial Organization, Elsevier, vol. 25(3), pages 483-510, June.
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    Cited by:

    1. Hidalgo-Hidalgo Marisa & Valera Guadalupe, 2016. "University Merging Process: A Guideline Proposal for Excellence-Enhancing," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 16(3), pages 1359-1386, September.

    More about this item

    Keywords

    Basic and applied research; R&; D; Scientific advances;

    JEL classification:

    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • H42 - Public Economics - - Publicly Provided Goods - - - Publicly Provided Private Goods
    • O38 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Government Policy

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