Public Policy and Venture Capital Backed Innovation

RICAFE Working Paper No. 004

55 Pages Posted: 1 Jan 2004

See all articles by Christian Keuschnigg

Christian Keuschnigg

University of St. Gallen – Department of Economics (FGN-HSG); CESifo (Center for Economic Studies and Ifo Institute); Centre for Economic Policy Research (CEPR)

Multiple version iconThere are 2 versions of this paper

Date Written: October 2003

Abstract

This paper discusses the role of public policy towards the venture capital industry. The model emphasizes four margins: supply of entrepreneurs due to career choice, entry of venture capital funds and search for investment opportunities, entrepreneurial effort and venture capital advice during the start-up period, and introduction of new goods by successful start-ups. The paper considers short- and long-run comparative static and welfare effects of policy reform with regard to capital gains taxation, innovation subsidies, public R&D spending and other policy initiatives.

Keywords: Innovation, venture capital, double moral hazard, public policy

JEL Classification: D82, G24, H21, H25, H32

Suggested Citation

Keuschnigg, Christian, Public Policy and Venture Capital Backed Innovation (October 2003). RICAFE Working Paper No. 004. Available at SSRN: https://ssrn.com/abstract=482545 or http://dx.doi.org/10.2139/ssrn.482545

Christian Keuschnigg (Contact Author)

University of St. Gallen – Department of Economics (FGN-HSG) ( email )

Varnbuelstrasse 19
St. Gallen, 9000
Switzerland

CESifo (Center for Economic Studies and Ifo Institute)

Poschinger Str. 5
Munich, DE-81679
Germany

Centre for Economic Policy Research (CEPR)

London
United Kingdom

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