Cooperation or non-cooperation in R&D: how should research be funded?

Abstract

This article compares two research funding policies in a cooperative or noncooperative R&D setting: subsidising private research (Spr) and subsidising public research (Spu). We show that the Spr policy induces better performance than the Spu approach in terms of overall net surplus whether rms cooperate or not in R&D. Nevertheless, subsidising public research leads to greater R&D investment overall provided that the knowledge externalities from the public to the private research sector are not too high. The Spu policy is more eective in terms of research eorts when rms cooperate and subsidies are low.

R&D cooperation, proximity and distribution of public funding between public and private research sectors

“…Our work completes previous studies such as those by Cabon‐Dhersin and Gibert (2019) and Cabon‐Dhersin and Taugourdeau (2018). Note that our analysis assumes that firms benefit freely from the knowledge produced by the public sector and that the public sector does not benefit from externalities from the private sector.…”

“…We would like to revisit this question of public support in the context of R&D cooperation in the private sector in the presence of active public research bodies. In a previous work (Cabon‐Dhersin & Gibert, 2019), we investigated and compared the effects of two widely employed R&D stimulation policies: providing R&D subsidies directly to firms (Spr policy), and stimulating private innovation indirectly by funding public research (Spu policy). However, this comparison is based on the view that a choice must be made between the two policies (either Spr or Spu).…”

University–firm competition in basic research: Simultaneous versus sequential moves

“…Link and Scott (2005) establish empirically that larger RJVs are more likely than smaller RJVs to include a university as a research partner “because larger ventures are less likely to expect substantial additional appropriability problems to result because of the addition of a university partner and because the larger ventures have both a lower marginal cost and a higher marginal value from university R&D contributions to the ventures' innovative output”. On the basis of Organisation for Economic Cooperation and Development (OECD) data, Cabon‐Dhersin and Gibert (2019, 2020) report that governments in OECD countries allocate public R&D funding differently between the private and the public research sectors (the latter includes universities and public labs) with a greater proportion (at least two‐thirds) going to the public sector than that to the private sector.…”

“…The theoretical literature on university–firm relationships explores various aspects of this important nexus that include research and educational quality along with other factors. Cabon‐Dhersin and Gibert (2019, 2020) propose models combining interfirm spillovers and one‐way university‐to‐firm spillovers to shed light on the socially optimal funding of R&D and its relationship to spillovers, both in cooperative and noncooperative settings. Hatsor and Zilcha (2020) investigate efficient government subsidization of different classes of universities through student aid and selection.…”