Scandinavian Working Papers in Economics

Working Papers,
University of Aarhus, Aarhus School of Business, Department of Economics

No 11-2: New Perspectives on the Evaluation of Public R&D Funding

Marianna Marino (), Pierpaolo Parrotta and Davide Sala
Additional contact information
Marianna Marino: College of Management of Technology, Postal: École Polytechnique Fédérale de Lausanne, Station 5, CH-1015 Lausanne, Switzerland
Pierpaolo Parrotta: Department of Economics, Aarhus School of Business, Postal: FRICHSHUSET , Hermodsvej 22, 1st and 2nd floors , DK 8230 Aabyhoej, Denmark
Davide Sala: Department of Economics, Aarhus School of Business, Postal: FRICHSHUSET , Hermodsvej 22, 1st and 2nd floors , DK 8230 Aabyhoej, Denmark

Abstract: Any economic criteria for an ecient allocation of resources is based on marginal \thinking". Such criteria can equally be applied to the evaluation of the public allocation of R&D funds. Di erently from the usual evaluation schemes - mainly dichotomous - this study implements the continuous treatment matching approach to investigate the optimality of the modulation of public grants. With this method, the marginal treatment e ects can be identi ed and sub-optimal amounts of public funding determined. Although we can distinguish cases of input additionality, the substitutability outcome seems to prevail also when unobserved heterogeneity is accounted for

Keywords: Public R&D funding; optimal amount of R&D funds; substitutability outcome

JEL-codes: C14; H50

32 pages, December 1, 2010

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