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IEB12-13_ArqueCastells.pdf (731.94 KB)

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Working paper

Publication date

2012

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cc-by-nc-nd, (c) Arqué Castells et al., 2012
Please use this identifier to cite or link to this item: https://hdl.handle.net/2445/116314

Sunk costs, extensive R&D subsidies and permanent inducement effects

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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 characterise 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.

Subject

Recerca industrial, Subvencions, Anàlisi de dades de panel

Subject (English)

Industrial research, Subsidies, Panel analysis

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IEB (Institut d’Economia de Barcelona) – Working Papers

Citation

ARQUÉ CASTELLS, Pere and MOHNEN, Pierre. Sunk costs, extensive R&D subsidies and permanent inducement effects. IEB Working Paper 2012/13. [consulted: 13 of August of 2026]. Available at: https://hdl.handle.net/2445/116314

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