Industry–research co‐operation within and across regional boundaries. What does innovation policy add?

The paper aims to show how regional policy‐makers can stimulate firms' co‐operation with research organizations by granting an R & D subsidy. Using an original dataset for the Italian region of E milia‐ R omagna, propensity score matching is first applied to identify the impact of the subsidy received. A generalized propensity score technique is then employed to investigate the effect of an increasing amount of support. The firm's co‐operation is policy sensitive. The award of a subsidy to regional firms affects their intra‐regional more than their extra‐regional co‐operation. The propensity toward the latter appears subject to a monetary effect and is influenced by the amount of public funding received providing the subsidy overcomes a minimum threshold.