Government Subsidies as a Risk-Sharing Policy Tool in Innovation Investment
Current literature on the impact assessment of government innovation subsidies is mainly empirical driven and lacks an overarching theoretical model to explain the conditions under which government subsidies create positive additionalities on private R&D investment. In this paper, we present a theoretical model that treats government subsidies as a risk-sharing vehicle for private R&D activities. More importantly, we argue that positive additionalities will be more likely to occur when the subsidies are allocated based on the risk-reward condition of the project. In addition, we show that the risk-sharing effect of government subsidies is influenced by a firm's absorptive capacity and the asset specificity of the project. By showing the conditions under which subsidies create positive additionality, we provide guidance to policymakers on how to improve the effectiveness of government support for innovation
Year of publication: |
2022
|
---|---|
Authors: | Lu, Hao ; De Fuentes, Claudia ; Milla, Joniada ; Ahmadi, Soheil |
Publisher: |
[S.l.] : SSRN |
Subject: | Technologiepolitik | Technology policy | Forschungsfinanzierung | Research funding | Innovation | Industrieforschung | Industrial research |
Saved in:
freely available
Extent: | 1 Online-Ressource (43 p) |
---|---|
Series: | IZA Discussion Paper ; No. 15725 |
Type of publication: | Book / Working Paper |
Language: | English |
Other identifiers: | 10.2139/ssrn.4281280 [DOI] |
Classification: | D50 - General Equilibrium and Disequilibrium. General ; H81 - Governmental Loans, Loan Guarantees, and Credits ; O31 - Innovation and Invention: Processes and Incentives ; O38 - Government Policy |
Source: | ECONIS - Online Catalogue of the ZBW |
Persistent link: https://www.econbiz.de/10014241969
Saved in favorites
Similar items by subject
-
Government subsidies as a risk-sharing policy tool in innovation investment
Lu, Hao, (2022)
-
Industrial research versus development investment : the implications of financial constraints
Czarnitzki, Dirk, (2009)
-
Czarnitzki, Dirk, (2001)
- More ...
Similar items by person