Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/212098 
Year of Publication: 
2008
Series/Report no.: 
Bank of Finland Research Discussion Papers No. 7/2008
Publisher: 
Bank of Finland, Helsinki
Abstract: 
This paper studies the welfare effects of R&D subsidies. We develop a model of continuous optimal treatment with outcome heterogeneity where the treatment outcome depends on applicant investment. The model takes into account heterogeneous application costs and identifies the treatment effect on the public agency running the programme. Under the assumption of a welfare-maximizing agency, we identify general equilibrium treatment effects. Applyiing our model to R&D project-level data we find substantial treatment effect heterogeneity. Agency-specific treatment effects are smaller than private treatment effects. We find that the rate of return on subsidies for the agency is 30-50%.
Subjects: 
applications
effort
investment
R&D
selection
subsidies
treatment programme
treatment effects
welfare
JEL: 
O38
O31
L53
C31
Persistent Identifier of the first edition: 
ISBN: 
978-952-462-431-2
Document Type: 
Working Paper

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