Do subsidies have positive impacts on R&D and innovation activities at the firm level? |
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Authors: | Tommy H Clausen |
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Institution: | Nordland Research Institute, N-8049 Bodo, and TIK, University of Oslo, Norway |
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Abstract: | In this paper we analyze whether and how “research” and “development” subsidies influence private R&D activity. Our empirical results show that “research” subsidies stimulate R&D spending within firms while “development” subsidies substitute such spending. At the theoretical level we find empirical support for the market failure argument that private R&D expenditure is best stimulated in areas where the gap between the social and the private rate of return to R&D is high. A policy implication is that technology programs should support research projects in the private sector in order to stimulate to more R&D. |
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