Publication: Barriers to innovation and subsidies effectiveness
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2001
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Abstract
This paper explores the e¤ects of R&D commercial subsidies by means of a model of …rms’ decisions about performing R&D when some government support can be expected. To estimate the parameters of interest we use an unbalanced panel sample of 1,800 performing and non-performing Spanish manufacturing …rms. For the non-performing …rms, we compute the trigger subsidies required to induce R&D spending (a measure of market failure). Among the performing …rms, we can detect the ones that would cease to perform R&D if subsidies were eliminated. We also explore the change in the privately …nanced R&D e¤ort of the performing …rms. Results support the claim that market failures are real and subsidies stimulate R&D activities, but also show that actual subsidies go to …rms that would have performed R&D otherwise.
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innovatin, subsides, thresholds, Tobit model