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Public Investment and Industry Incentives in Life‐Science Research
Author(s) -
Wang Chenggang,
Xia Yin,
Buccola Steven
Publication year - 2009
Publication title -
american journal of agricultural economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.949
H-Index - 111
eISSN - 1467-8276
pISSN - 0002-9092
DOI - 10.1111/j.1467-8276.2008.01246.x
Subject(s) - competition (biology) , investment (military) , government (linguistics) , incentive , public investment , private sector , economics , public economics , business , principal (computer security) , public sector , basic research , public policy , industrial organization , market economy , economic growth , public fund , political science , economy , ecology , linguistics , philosophy , politics , computer science , law , biology , operating system , library science
Life‐science research has shifted rapidly from the public to the private sector, raising questions about government's remaining role. We shed light on the issue by employing a dynamic investment‐response model to examine the public's impact on industry life‐science research effort and success. We find that government expenditures in both basic biological research and agricultural and medical science create substantial spillovers for private firms. The spillovers are, unfortunately, partly nullified by government competition for scarce research inputs. Yet even after accounting for such competition, public investment has been strongly complementary to private investment. Indeed, opportunities created through public research are the principal source of growth in industry life sciences.