Persistence in R&D Performance and its Implications for the Granting of Subsidies

Persistence in R&D Performance and its Implications for the Granting of Subsidies We study whether R&D subsidies can be used to encourage sustained R&D performance. To this end we measure the importance of true state dependence (TSD) in R&D performance and of subsidies’ inducement effects. Estimates that are based on a panel of Spanish manufacturing firms that are observed during the period 1998–2009 reveal that both magnitudes are positive and significant. Simulations that are carried out with the estimated parameters show that subsidies can generate permanent inducement effects for 9 % of Spanish manufacturing firms. The subsidy shares that are needed to generate permanent inducement effects among small firms (firms with fewer than 200 employees) are larger than those that are needed to generate permanent inducement effects among large firms (firms with 200 or more employees). http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Review of Industrial Organization Springer Journals

Persistence in R&D Performance and its Implications for the Granting of Subsidies

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Publisher
Springer US
Copyright
Copyright © 2013 by Springer Science+Business Media New York
Subject
Economics / Management Science; Industrial Organization; Microeconomics
ISSN
0889-938X
eISSN
1573-7160
D.O.I.
10.1007/s11151-013-9381-0
Publisher site
See Article on Publisher Site

Abstract

We study whether R&D subsidies can be used to encourage sustained R&D performance. To this end we measure the importance of true state dependence (TSD) in R&D performance and of subsidies’ inducement effects. Estimates that are based on a panel of Spanish manufacturing firms that are observed during the period 1998–2009 reveal that both magnitudes are positive and significant. Simulations that are carried out with the estimated parameters show that subsidies can generate permanent inducement effects for 9 % of Spanish manufacturing firms. The subsidy shares that are needed to generate permanent inducement effects among small firms (firms with fewer than 200 employees) are larger than those that are needed to generate permanent inducement effects among large firms (firms with 200 or more employees).

Journal

Review of Industrial OrganizationSpringer Journals

Published: Mar 8, 2013

References

  • A note on estimated coefficients in random effects probit models
    Arulampalam, W
  • Is there persistence in innovative activities?
    Cefis, E
  • Is public R &D a complement or substitute for private R &D? A review of the econometric evidence
    David, P; Hall, BH; Toole, A
  • Do public subsidies stimulate private R &D spending?
    González, X; Pazó, C

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