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A Theoretical Analysis of Public Funding for Research

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Abstract

This paper studies government funding for scientific research. Funds must be distributed among different research institutions and allocated between basic and applied research. Informational constraints prevent less productive institutions to be given any government funding. In order to internalise the beneficial effects of research, the government requires the most productive institutions to carry out more applied research than they would like. Funding for basic research is used by the government to induce more productive institutions to carry out more applied research then they would like.

Suggested Citation

  • Gianni De Fraja, 2011. "A Theoretical Analysis of Public Funding for Research," CEIS Research Paper 199, Tor Vergata University, CEIS, revised 30 Jun 2011.
    • Handle: RePEc:rtv:ceisrp:199
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    1. Gersbach, Hans & Sorger, Gerhard & Amon, Christian, 2018. "Hierarchical growth: Basic and applied research," Journal of Economic Dynamics and Control, Elsevier, vol. 90(C), pages 434-459.
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    1. Hidalgo-Hidalgo Marisa & Valera Guadalupe, 2016. "University Merging Process: A Guideline Proposal for Excellence-Enhancing," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 16(3), pages 1359-1386, September.

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    More about this item

    Keywords

    Basic and applied research; R&D; Scientific advances;
    All these keywords.

    JEL classification:

    • O38 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Government Policy
    • H42 - Public Economics - - Publicly Provided Goods - - - Publicly Provided Private Goods
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design

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