Public Subsidies and Cooperation in Research and Development. Evidence from the Lab.

44 Pages Posted: 3 Feb 2022 Last revised: 30 May 2023

See all articles by Antonio Acconcia

Antonio Acconcia

CSEF - University of Naples Federico II

Sergio Beraldo

CSEF - University of Naples Federico II

Carlo Capuano

CSEF - University of Naples Federico II; CSEF - University of Naples Federico II - Centre for Studies in Economics and Finance (CSEF)

Marco Stimolo

CSEF - University of Naples Federico II

Date Written: January 31, 2022

Abstract

We implement an experimental design based on a duopoly game in order to analyse the impact of public subsidies on the willingness to cooperate in research and development (R&D) activities. We first implement six experimental markets by exogenously varying the level of knowledge spillovers (low or high) and the intensity of competition in the product market (low, intermediate, or high). We find that the probability of cooperation increases in the level of spillovers and decreases in that of market competition. We then replicate the six experimental markets by subsidising subjects who cooperate. Whenever they are sufficient to change the incentive structure of the game, subsidies substantially increase the probability of cooperation, causing, however, a reduction of R&D investments. Overall, our evidence suggests that, depending on the characteristics of the market, the provision of subsidies is not always desirable. These might be redundant because firms have sufficient private incentives to invest cooperatively in R&D, or even counterproductive, as they might induce firms to significantly reduce R&D investments compared to the noncooperative scenario.

Keywords: Cooperation in R&D, Public Subsidies, Knowledge Spillovers, Market Competition

JEL Classification: L24, O3

Suggested Citation

Acconcia, Antonio and Beraldo, Sergio and Capuano, Carlo and Stimolo, Marco, Public Subsidies and Cooperation in Research and Development. Evidence from the Lab. (January 31, 2022). FEEM Working Paper No. 2, 2022, Available at SSRN: https://ssrn.com/abstract=4022046 or http://dx.doi.org/10.2139/ssrn.4022046

Antonio Acconcia

CSEF - University of Naples Federico II ( email )

VIA L. RODINO' 22
NAPOLI, 80132
Italy

Sergio Beraldo (Contact Author)

CSEF - University of Naples Federico II ( email )

Caserta

Carlo Capuano

CSEF - University of Naples Federico II ( email )

Via Cintia 26
Napoli
Italy

CSEF - University of Naples Federico II - Centre for Studies in Economics and Finance (CSEF) ( email )

Via Cintia
Complesso Monte S. Angelo
Naples, Naples 80126
Italy

Marco Stimolo

CSEF - University of Naples Federico II ( email )

Corso Umberto I, 40
Napoli, 80138
Italy

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
31
Abstract Views
220
PlumX Metrics