We extend the theoretical basis of the empirical literature on the effects of R&D subsidies by providing an estimable model of strategic interaction among subsidy applicants, and public and private sector R&D financiers. Our model incorporates fixed R&D costs and a cost of external finance. We...

We build a structural model of application and selection into a treatment program to study the effects of R&D subsidies. The investments of the participant and the public agency running the program affect the treatment outcome. Using project level data we find that larger firms have higher...

This paper studies the welfare effects of Ramp;D subsidies. We develop a model of continuous optimal treatment with outcome heterogeneity where the treatment outcome depends on applicant investment. The model takes into account heterogeneous application costs and identifies the treatment effect...

We construct a model of innovation incorporating R&D externalities, R&D participation, financial market imperfections, and application and allocation of R&D subsidies, estimate it using Finnish R&D project level data and conduct a welfare analysis. The intensive, not the extensive R&D margin is...

There is plenty of evidence for market failures that motivate government intervention for innovation in general and research and development (R&D) in particular. R&D subsidies are a policy tool of major importance - both in theory and practice. The empirical evidence for the effectiveness of R&D...