This study analyzes the effect of public R&D subsidies on private R&D expenditure in a sample of French firms during the period 1993–2009. We evaluate whether there is any input additionality of public R&D subsidies by distinguishing between R&D tax credit recipient and non-recipient firms. In addition, combining difference-in-differences with propensity score and exact (both simple and categorical) matching methods, we assess the effect of R&D subsidies between treated (subsidy recipients) and controls (subsidy non-recipients) as well as between differently treated (small, medium and large subsidy recipient) firms. Furthermore, we implement a dose–response matching approach to determine the optimality of public R&D subsidy provisions. We find evidence of either no additionality or substitution effects between public and private R&D expenditure. Crowding-out effects appear to be more pronounced for medium-high levels of public subsidies, and generally under the R&D tax credit regime. A number of robustness checks corroborate our main findings.

Additionality or crowding-out? An overall evaluation of public R&D subsidy on private R&D expenditure

Marino M.;
2016-01-01

Abstract

This study analyzes the effect of public R&D subsidies on private R&D expenditure in a sample of French firms during the period 1993–2009. We evaluate whether there is any input additionality of public R&D subsidies by distinguishing between R&D tax credit recipient and non-recipient firms. In addition, combining difference-in-differences with propensity score and exact (both simple and categorical) matching methods, we assess the effect of R&D subsidies between treated (subsidy recipients) and controls (subsidy non-recipients) as well as between differently treated (small, medium and large subsidy recipient) firms. Furthermore, we implement a dose–response matching approach to determine the optimality of public R&D subsidy provisions. We find evidence of either no additionality or substitution effects between public and private R&D expenditure. Crowding-out effects appear to be more pronounced for medium-high levels of public subsidies, and generally under the R&D tax credit regime. A number of robustness checks corroborate our main findings.
2016
Optimal provision of public R&D support
R&D subsidy
R&D tax credit
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Utilizza questo identificativo per citare o creare un link a questo documento: https://hdl.handle.net/20.500.11771/31587
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