The Effect of R&D Subsidies on Private R&D
Kiel Institute for the World Economy; Institute for the Study of Labor (IZA)
Ecole Polytechnique, Paris - Department of Economic Sciences; Institute for the Study of Labor (IZA)
Economica, Vol. 74, No. 294, pp. 215-234, May 2007
This paper investigates the relationship between government support for R&D and R&D expenditure financed privately by firms using a comprehensive plant level data set for the manufacturing sector in the Republic of Ireland. We find that for domestic plants small grants serve to increase private R&D spending, while too large a grant may crowd out private financing of R&D. In contrast, evidence for foreign establishments suggests that grant provision causes neither additionality nor crowding out effects of private R&D financing, regardless of the size of the subsidy.
Number of Pages in PDF File: 20Accepted Paper Series
Date posted: April 11, 2007
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