Abstract
In evaluating the effect of an R & D subsidy we need to know what the subsidized firm would have spent on R & D had it not received the subsidy. Using data on Israeli manufacturing firms in the 1990s we find evidence suggesting that the R & D subsidies granted by the Ministry of Industry and Trade greatly stimulated company financed R & D expenditures for small firms but had a negative effect on the R & D of large firms, although not statistically significant. One subsidized New Israeli Shekel (NIS) induces 11 additional NIS of own R & D for the small firms. However, because most subsidies go to the large firms a subsidy of one NIS generates, on average, a statistically insignificant 0.23 additional NIS of company financed R & D.
| Original language | American English |
|---|---|
| Pages (from-to) | 369-390 |
| Number of pages | 22 |
| Journal | Journal of Industrial Economics |
| Volume | 50 |
| Issue number | 4 |
| DOIs | |
| State | Published - Dec 2002 |