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The link between public support and private R&D effort: What is the optimal subsidy?
Duch Brown, Néstor; García Quevedo, José, 1963-; Montolio, Daniel
Xarxa de Referència en Economia Aplicada (XREAP)
The effectiveness of R&D subsidies can vary substantially depending on their characteristics. Specifically, the amount and intensity of such subsidies are crucial issues in the design of public schemes supporting private R&D. Public agencies determine the intensities of R&D subsidies for firms in line with their eligibility criteria, although assessing the effects of R&D projects accurately is far from straightforward. The main aim of this paper is to examine whether there is an optimal intensity for R&D subsidies through an analysis of their impact on private R&D effort. We examine the decisions of a public agency to grant subsidies taking into account not only the characteristics of the firms but also, as few previous studies have done to date, those of the R&D projects. In determining the optimal subsidy we use both parametric and nonparametric techniques. The results show a non-linear relationship between the percentage of subsidy received and the firms’ R&D effort. These results have implications for technology policy, particularly for the design of R&D subsidies that ensure enhanced effectiveness.
Government policy
Industrial research
332 - Economia regional i territorial. Economia del sòl i de la vivenda
334 - Formes d'organització i cooperació en l'economia
Política pública
Recerca industrial
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45 p.
Working Paper
Xarxa de Referència en Economia Aplicada (XREAP)
XREAP; 2011-09

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