en

IEB

Universitat de Barcelona logotipo
Working Paper
Fiscal Federalism
Néstor Duch-Brown, José García-Quevedo, Daniel Montolio

2011/12: The link between public support and private R&D effort: what is the optimal subsidy?

The effectiveness of R&D subsidies can vary substantially depending on their characteristics. Specifically, the amount and intensity of such subsidies are crucial issues in the design of public schemes supporting private R&D. Public agencies determine the intensities of R&D subsidies for firms in line with their eligibility criteria, although assessing the effects of R&D projects accurately is far from straightforward. The main aim of this paper is to examine whether there is an optimal intensity for R&D subsidies through an analysis of their impact on private R&D effort. We examine the decisions of a public agency to grant subsidies taking into account not only the characteristics of the firms but also, as few previous studies have done to date, those of the R&D projects. In determining the optimal subsidy we use both parametric and non-parametric techniques. The results show a non-linear relationship between the percentage of subsidy received and the firms’ R&D effort. These results have implications for technology policy, particularly for the design of R&D subsidies that ensure enhanced effectiveness.



Download PDF

This website uses cookies to ensure that you receive the best experience when navigating. If you continue without changing the settings, you accept its use in conformity with our cookies policy. More information