Do direct R&D subsidies lead to the monopolization of R&D in the economy?


Czarnitzki, Dirk ; Ebersberger, Bernd


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URL: http://ub-madoc.bib.uni-mannheim.de/3040
URN: urn:nbn:de:bsz:180-madoc-30407
Document Type: Working paper
Year of publication: 2010
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: O38 O32 O31 ,
Subject headings (SWD): Forschung und Entwicklung , Forschungsförderung , Subvention , Deutschland , Finnland
Keywords (English): R&D Concentration , R&D Subsidies , Treatment Effects , Policy Evaluation
Abstract: This paper explores the impact of R&D subsidies on the concentration of R&D in an economy. First, governments are often criticized of subsidizing predominantly larger firms and thus contribute to persistence of leadership in markets and higher barriers to entry, and, hence, reduced competition eventually. Second, theoretical literature, such as endogenous growth literature, has also shown that governmental intervention in the market for R&D affects the distribution of R&D which finally affects product market concentration. We test the relationship between R&D subsidies and R&D concentration employing treatment effects models on data of German and Finnish manufacturing firms. The data and estimations allow calculating concentration indices for the population of firms for both the actual situation where some selected companies receive R&D subsidies and the counterfactual situation describing the absence of subsidies. We find that R&D subsidies do not lead to higher concentration of R&D. On the contrary, we even find that R&D concentration is significantly reduced because of subsidies. This result may be attributed to the fact that technology policy maintains special funding schemes for small and medium-sized companies. The fact that the larger companies benefit from a higher likelihood of a subsidy receipt is offset by the phenomenon that smaller firms may be completely deterred from any R&D activity if they would not receive governmental support.
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Das Dokument wird vom Publikationsserver der Universitätsbibliothek Mannheim bereitgestellt.




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Czarnitzki, Dirk ; Ebersberger, Bernd (2010) Do direct R&D subsidies lead to the monopolization of R&D in the economy? Open Access [Working paper]
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