This paper evaluates a unique R&D subsidy program implemented
in northern Italy. Firms were invited to submit proposals for new
projects and only those which scored above a certain threshold
received the subsidy. We use a sharp regression discontinuity
design to compare the investment spending of subsidized firms with
that of unsubsidized firms. For the sample as a whole we find no
significant increase in investment. This overall effect, however, masks
substantial heterogeneity in the program's impact. We estimate that
small enterprises increased their investments- by approximately the
amount of the subsidy they received- whereas larger firms did not.
Bronzini, Raffaello, and Eleonora Iachini.
"Are Incentives for R&D Effective? Evidence from a Regression Discontinuity Approach."
American Economic Journal: Economic Policy,
Capital Budgeting; Fixed Investment and Inventory Studies; Capacity
Corporate Finance and Governance: Government Policy and Regulation
Industrial Policy; Sectoral Planning Methods
Technological Change: Choices and Consequences; Diffusion Processes
Technological Change: Government Policy
Other Spatial Production and Pricing Analysis