Does the Effect of Public Support for R&D Depend on the Degree of Appropriability?

We explore the interaction between public support for R&D and appropriability using a dataset constructed from the Spanish Community Innovation Survey, for the period 2000-2005. We find that public support policy is less able to stimulate privately financed internal R&D in firms where appropriability mechanisms are more effective. On average, the effect of public support for R&D is three times larger for those firms reporting a level of appropriability below the median vis-a-vis those firms for which appropriability is above the median level. Furthermore, for supported firms with the highest degree of appropriability, crowding out cannot be ruled out