The Impact of Public Funding for Innovation on Firms' R&D Investments: Do R&D Cooperation and Appropriability Matter?

Abstract

This paper provides an empirical framework to explore how public funding affects firms' R&D investments depending on their engagement in horizontal R&D cooperation and on different levels of appropriability conditions within the economy. The sample includes Spanish and Italian firms participating at the 3rd and 4th Third Community Innovation Survey. The results confirm that the impact of public funding on R&D investments depends on the firms' cooperative behavior and the appropriability conditions, although the influence is not homogeneous. In addition, the empirical findings highlight some important tradeoffs between those policies that support innovation activities.