Year: 2007
Type: article
Abstract: We study the returns to R&D, their distribution and their determinants, including the treatment effects of subsidies.We develop a model of continuous optimal treatment with outcome heterogeneity, where the treatment outcome depends on the applicant' s investment.The model takes into account application costs, and isolates the effect of the treatment on the public agency running the treatment program.Under the assumption of a welfare-maximizing agency, we identify general equilibrium treatment effects and social returns to R&D.We take our model to project level data from the granting process of R&D subsidies and find that returns on R&D are high, their distribution skew, and treatment effect heterogeneity substantial.Agency' s utility not appropriated by the applicant is linear in R&D.The median increase in this agency specific utility from subsidies is 44 000€.Ignoring application costs severely biases the estimated treatment effects and returns upwards.
Source: Työväentutkimus Vuosikirja
Authors: Tuomas Takalo, Tanja Tanayama, Otto Toivanen
Language: English
Topic: Innovation Policy and R&D
Subfield: Economics and Econometrics
Domain: Social Sciences
Open Access status: green
Funders: Yrjö Jahnssonin Säätiö, Tekes
OpenAlex ID: W1433126546