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Matthew effects and R&D subsidies: knowledge cumulability in high-tech and low-tech industries

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  • Francesco Crespi
  • Cristiano Antonelli

Abstract

The paper explores the causes and effects of persistence in the discretionary allocation of public subsidies to R&D activities performed by private firms in high-tech and low-tech industries. It applies the distinction between virtuous Matthew-effects and vicious Matthew-effects. The former qualifies the persistence in the discretionary allocation of public subsidies in terms of sheer reputation based upon previous awards. The latter is identified by the role of the accumulation of competence stemming from past grants in current R&D activities. Virtuous Matthew effects are found in high-tech industries where knowledge cumulability is higher. In traditional industries, vicious Matthew effects prevail for the lower levels of knowledge cumulability. Here reputation-Matthew-effects can lead to substitution of private funds with public ones. The empirical analysis is based on Transition Probability Matrices, probit regressions and Propensity Score Matching on around 700 Italian firms in the years 1998-2003.

Suggested Citation

  • Francesco Crespi & Cristiano Antonelli, 2011. "Matthew effects and R&D subsidies: knowledge cumulability in high-tech and low-tech industries," Departmental Working Papers of Economics - University 'Roma Tre' 0140, Department of Economics - University Roma Tre.
    • Handle: RePEc:rtr:wpaper:0140
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    Cited by:

    1. Sergey Sinelnikov-Murylev & Alexandr Radygin (ed.), 2018. "Russian Economy in 2017. Trends and Outlooks. In Russian," Books, Gaidar Institute for Economic Policy, edition 1, volume 39, number re39-2017-ru.
    2. Sergey Sinelnikov-Murylev & Alexandr Radygin (ed.), 2018. "Russian Economy in 2017. Trends and Outlooks. (Issue 39) In English," Books, Gaidar Institute for Economic Policy, edition 1, volume 39, number re39-2017-en.
    3. Dezhina, I. & Simachev, Yu., 2013. "Matching Grants for Stimulating Partnerships between Companies and Universities in Innovation Area: Initial Effects in Russia," Journal of the New Economic Association, New Economic Association, vol. 19(3), pages 99-122.
    4. Simachev, Yuri & Kuzyk, Mikhail & Feygina, Vera, 2014. "Cooperation between Russian research organizations and industrial companies: factors and problems," MPRA Paper 57503, University Library of Munich, Germany.
    5. Simachev, Yuri & Kuzyk, Mikhail & Ivanov, Denis, 2012. "Fostering innovation in Russian companies in the post-crisis period: Opportunities and constraints," MPRA Paper 41284, University Library of Munich, Germany.
    6. Antonelli, Cristiano, 2016. "Technological congruence and the economic complexity of technological change," Structural Change and Economic Dynamics, Elsevier, vol. 38(C), pages 15-24.
    7. Simachev, Yuri & Kuzyk, Mikhail & Feygina, Vera, 2015. "Interaction between Business and Research Organizations in the Sphere of Innovations: The Russian Experience in Promoting Cooperation," Published Papers 431503, Russian Presidential Academy of National Economy and Public Administration.
    8. Antonelli,Cristiano, 2013. "The economics of technological congruence," Department of Economics and Statistics Cognetti de Martiis LEI & BRICK - Laboratory of Economics of Innovation "Franco Momigliano", Bureau of Research in Innovation, Complexity and Knowledge, Collegio 201304, University of Turin.
    9. Roberto Gabriele & Anna Giunta, 2012. "R&D Incentives: The Effectiveness Of A Place-Based Policy," Departmental Working Papers of Economics - University 'Roma Tre' 0169, Department of Economics - University Roma Tre.
    10. Yu. Simachev & M. Kuzyk & V. Feygina., 2014. "R&D Cooperation between Russian Firms and Research Organizations: Is There a Need for State Assistance?," VOPROSY ECONOMIKI, N.P. Redaktsiya zhurnala "Voprosy Economiki", vol. 7.

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    More about this item

    Keywords

    Innovation; R&D subsidies; Matthew effects; past dependence; path dependence;
    All these keywords.

    JEL classification:

    • H25 - Public Economics - - Taxation, Subsidies, and Revenue - - - Business Taxes and Subsidies
    • H32 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Firm
    • L52 - Industrial Organization - - Regulation and Industrial Policy - - - Industrial Policy; Sectoral Planning Methods

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