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A Theoretical Analysis of Public Funding for Research

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 then they would like.

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Paper provided by Tor Vergata University, CEIS in its series CEIS Research Paper with number 199.

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Length: 36 pages
Date of creation: 30 Jun 2011
Date of revision: 30 Jun 2011
Handle: RePEc:rtv:ceisrp:199
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  1. 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.
  2. Stephan, Paula E., 2010. "The Economics of Science," Handbook of the Economics of Innovation, Elsevier.
  3. Léonard,Daniel & Long,Ngo van, 1992. "Optimal Control Theory and Static Optimization in Economics," Cambridge Books, Cambridge University Press, number 9780521331586, November.
  4. Frederic Palomino & Jozsef Sakovics, 2003. "Inter-league competition for talent vs. competitive balance," ESE Discussion Papers 96, Edinburgh School of Economics, University of Edinburgh.
  5. Marie Thursby & Richard Jensen, 2001. "Proofs and Prototypes for Sale: The Licensing of University Inventions," American Economic Review, American Economic Association, vol. 91(1), pages 240-259, March.
  6. Stein, Jeremy C. & Dewatripont, Mathias & Aghion, Philippe, 2008. "Academic Freedom, Private-Sector Focus, and the Process of Innovation," Scholarly Articles 3637074, Harvard University Department of Economics.
  7. Jean-Jacques Laffont & Jean Tirole, 1993. "A Theory of Incentives in Procurement and Regulation," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262121743, December.
  8. Mansfield, Edwin, 1980. "Basic Research and Productivity Increase in Manufacturing," American Economic Review, American Economic Association, vol. 70(5), pages 863-73, December.
  9. De Fraja, Gianni & Valbonesi, Paola, 2008. "The Design of the University System," CEPR Discussion Papers 7038, C.E.P.R. Discussion Papers.
  10. Hans Gersbach & Gerhard Sorger & Christian Amon, 2009. "Hirarchical Growth: Basic and Applied Research," Vienna Economics Papers 0912, University of Vienna, Department of Economics.
  11. Evenson, Robert E & Kislev, Yoav, 1976. "A Stochastic Model of Applied Research," Journal of Political Economy, University of Chicago Press, vol. 84(2), pages 265-81, April.
  12. Philippe Aghion & Mathias Dewatripont & Jeremy C. Stein, 2008. "Academic freedom, private-sector focus, and the process of innovation," RAND Journal of Economics, RAND Corporation, vol. 39(3), pages 617-635.
  13. Macho-Stadler Inés & Pérez-Castrillo David & Veugelers Reinhilde, 2005. "Licensing of University Inventions: The Role of a Technology Transfer Office," Working Papers 201022, Fundacion BBVA / BBVA Foundation.
  14. Link, Albert N, 1981. "Basic Research and Productivity Increase in Manufacturing: Additional Evidence," American Economic Review, American Economic Association, vol. 71(5), pages 1111-12, December.
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