Business R&D and the Interplay of R&D Subsidies and Market Uncertainty


Czarnitzki, Dirk ; Toole, Andrew A.


[img]
Preview
PDF
dp06055.pdf - Published

Download (154kB)

URL: http://ub-madoc.bib.uni-mannheim.de/1439
URN: urn:nbn:de:bsz:180-madoc-14392
Document Type: Working paper
Year of publication: 2006
Publication language: English
Institution: Sonstige Einrichtungen > ZEW - Leibniz-Zentrum für Europäische Wirtschaftsforschung
MADOC publication series: Veröffentlichungen des ZEW (Leibniz-Zentrum für Europäische Wirtschaftsforschung) > ZEW Discussion Papers
Subject: 330 Economics
Classification: JEL: C25 O33 O31 ,
Subject headings (SWD): Forschung und Entwicklung , Entscheidung bei Unsicherheit
Keywords (English): Real Options Theory , Uncertainty , R&D , Censored Regression
Abstract: The literature suggests that public research and development (R&D) subsidies may reduce market failures affecting private R&D investment caused by incomplete appropriability of knowledge and financial constraints due capital market imperfections. Drawing on the theory of investment under uncertainty, this paper argues that public R&D subsidies increase business R&D investment through an additional mechanism – mitigating the effects of market uncertainty on R&D investment in markets for new products. Using a sample of German manufacturing firms, we show that market uncertainty indeed reduces R&D investment, and that R&D subsidies mitigate the effect of uncertainty. Our findings suggest that public policies aimed at increasing business R&D investment can achieve this objective by reducing the degree of uncertainty in the demand for innovative products.
Additional information:

Das Dokument wird vom Publikationsserver der Universitätsbibliothek Mannheim bereitgestellt.




+ Citation Example and Export

Czarnitzki, Dirk ; Toole, Andrew A. (2006) Business R&D and the Interplay of R&D Subsidies and Market Uncertainty. Open Access [Working paper]
[img]
Preview


+ Search Authors in

+ Download Statistics

Downloads per month over past year

View more statistics



You have found an error? Please let us know about your desired correction here: E-Mail


Actions (login required)

Show item Show item