Working Paper: CEPR ID: DP8442
Authors: Gianni De Fraja
Abstract: 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.
Keywords: Basic and applied research; R&D; Scientific advances
JEL Codes: D82; H42; O38
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| government funding (H59) | applied research output (O36) |
| information asymmetry (D82) | funding allocation inefficiency (D61) |
| basic research funding (I23) | applied research output (O36) |
| government funding (H59) | productivity of institutions (O43) |
| funding structure (G32) | research output (O36) |