Template-type: ReDIF-Paper 1.0
Author-Name: Arqué-Castells, Pere
Author-Email: pere_arque@ub.edu
Author-Workplace-Name: Universitat de Barcelona, and Institut d’Economia de Barcelona
Author-Name: Mohnen, Pierre
Author-Email: mohnen@merit.unu.edu
Author-Workplace-Name: UNU-MERIT / MGSOG Maastricht University
Title: Sunk costs, extensive R&D subsidies and permanent inducement effects
Abstract: We study whether there is scope for using subsidies to smooth out barriers to R&D
	performance and expand the share of R&D firms in Spain. We consider a dynamic
	model with sunk entry costs in which firms’ optimal participation strategy is defined in
	terms of two subsidy thresholds that characterize entry and continuation. We compute
	the subsidy thresholds from the estimates of a dynamic panel data type-2 tobit model for
	an unbalanced panel of about 2,000 Spanish manufacturing firms. The results suggest
	that “extensive” subsidies are a feasible and efficient tool for expanding the share of
	R&D firms.
Classification-JEL: H25, O23, O31, O38, C15, D22
Keywords: R&D, Persistence, Subsidies, Dynamic models
Series: UNU-MERIT Working Papers
Creation-Date: 2012
Number: 2012-029
File-URL: https://unu-merit.nl/publications/wppdf/2012/wp2012-029.pdf
File-Format: application/pdf
File-Size: 275 Kb
Handle: RePEc:unm:unumer:2012029