Persistence in R&D Performance and its Implications for the Granting of Subsidies

Pere Arqué-Castells

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    23 Citations (Scopus)

    Abstract

    We study whether R&D subsidies can be used to encourage sustained R&D performance. To this end we measure the importance of true state dependence (TSD) in R&D performance and of subsidies' inducement effects. Estimates that are based on a panel of Spanish manufacturing firms that are observed during the period 1998-2009 reveal that both magnitudes are positive and significant. Simulations that are carried out with the estimated parameters show that subsidies can generate permanent inducement effects for 9 % of Spanish manufacturing firms. The subsidy shares that are needed to generate permanent inducement effects among small firms (firms with fewer than 200 employees) are larger than those that are needed to generate permanent inducement effects among large firms (firms with 200 or more employees). © 2013 Springer Science+Business Media New York.
    Original languageEnglish
    Pages (from-to)193-220
    JournalReview of Industrial Organization
    Volume43
    DOIs
    Publication statusPublished - 1 Nov 2013

    Keywords

    • Dynamic discrete models
    • Persistence
    • R&D
    • Subsidies

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