Additionality or crowding-out? An overall evaluation of public R&D subsidy on private R&D expenditure

Marianna Marino, Stephane Lhuillery, Pierpaolo Parrotta, Davide Sala

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    Abstract

    This study analyzes the effect of public R&D subsidies on private R&D expenditure in a sample of French firms during the period 1993-2009. We evaluate whether there is any input additionality of public R&D subsidies by distinguishing between R&D tax credit recipient and non-recipient firms. In addition, combining difference-in-differences with propensity score and exact (both simple and categorical) matching methods, we assess the effect of R&D subsidies between treated (subsidy recipients) and controls (subsidy non-recipients) as well as between differently treated (small, medium and large subsidy recipient) firms. Furthermore, we implement a dose-response matching approach to determine the optimality of public R&D subsidy provisions. We find evidence of either no additionality or substitution effects between public and private R&D expenditure. Crowding-out effects appear to be more pronounced for medium-high levels of public subsidies, and generally under the R&D tax credit regime. A number of robustness checks corroborate our main findings. (C) 2016 Elsevier B.V. All rights reserved.

    Original languageEnglish
    Pages (from-to)1715-1730
    Number of pages16
    JournalResearch Policy
    Volume45
    Issue number9
    DOIs
    Publication statusPublished - Nov 2016

    Keywords

    • R&D subsidy
    • R&D tax credit
    • Optimal provision of public R&D support
    • META-REGRESSION ANALYSIS
    • ECONOMETRIC EVIDENCE
    • INNOVATION
    • COMPLEMENT
    • STIMULATE
    • PROGRAMS
    • GERMANY
    • DEMAND
    • CRISIS
    • FIRMS

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