DP8442 A Theoretical Analysis of Public Funding for Research
|Author(s):||Gianni De Fraja|
|Publication Date:||June 2011|
|Keyword(s):||Basic and applied research, R&D, Scientific advances|
|JEL(s):||D82, H42, O38|
|Programme Areas:||Public Economics|
|Link to this Page:||cepr.org/active/publications/discussion_papers/dp.php?dpno=8442|
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 than they would like.