Research Subsidies Research Articles

Clean innovation, heterogeneous financing costs, and the optimal climate policy mix

Access to finance is a major barrier to clean innovation. We incorporate a financial sector in a directed technological change model, where research firms working on different technologies raise funding from financial intermediaries at potentially different costs. We show that, in addition to a rising carbon tax and a generous but short-lived clean research subsidy, optimal climate policies include a clean finance subsidy directly aimed at reducing the financing cost differential across technologies. The presence of an endogenous financing experience effect induces stronger mitigation efforts in the short-term to accelerate the convergence of heterogeneous financing costs. This is achieved primarily through a carbon price premium of 39% in 2025, relative to a case with no financing costs.

Optimal strategies in electric vehicle battery closed-loop supply chain considering government subsidies and echelon utilization

This study examines an electric vehicle battery closed-loop supply chain including a battery manufacturer and a retailer, with a focus on echelon utilization and remanufacturing of waste electric vehicle battery. Optimal pricing strategies and technological effort decision of the supply chain members are derived based on a Stackelberg game model. Three government subsidy policies are considered to promote recycling and reuse of waste electric vehicle batteries, namely, no subsidies, production research and development (R&D) subsidies and recycling subsidies, respectively. Results show that both echelon utilization and recycling subsidies can notably contribute to recycling rate of waste electric vehicle batteries. While echelon utilization boosts the profit of retailer and the whole supply chain, it may have a negative impact on manufacturer's inclination to remanufacturing and its profit. Subsidies for production research and development are preferred by the supply chain and its members from the profit-oriented perspective. Further analyses are conducted under hybrid strategies: hybrid government subsidy policy and hybrid recycling mode. Results show that hybrid strategies could significantly increase the demand and recycling volume, thus positively affecting the profitability of the entire closed-loop supply chain. Our study comprehensively considers the game relationships among manufacture and retailer, enhancing the efficiency of recycling and profitability while also providing a theoretical basis for the government to formulate reasonable subsidy policies.

A carbon tax versus clean subsidies: Optimal and suboptimal policies for the clean transition

A three-sector – services, clean and dirty - integrated assessment model with endogenous technology is described. Optimal policy leads to a period of intense clean research and requires a carbon tax and clean research subsidies. Using multiple calibrations, I explore the relative performance of these instruments when acting alone, along with a clean production subsidy and a dirty research tax. A carbon tax wins in most, but if optimal policy occurs after 2050, each instrument wins in some calibrations. Both a carbon tax and a clean production subsidy should apply if research instruments are unavailable. (JEL O30, O44, Q54, Q56, Q58).

Endogenous timing of R&D decisions with spillovers: Output versus research subsidies

AbstractThis study considers an endogenous timing game of R&D decisions with research spillovers and compares the effects of output and research subsidies. We show that the simultaneous‐move (sequential‐move) game is an equilibrium if the spillover rate is low (high) under an output subsidy while this equilibrium is socially beneficial if the spillover rate is high or low enough. Under a research subsidy, however, the simultaneous‐move game is a unique equilibrium regardless of the spillover rate, which is always socially beneficial. We also show that an output subsidy in the simultaneous‐move game provides higher (lower) social welfare than a research subsidy if the spillover rate is low (high). Finally, we provide the robustness of our findings and some policy‐relevant discussions.

Avaliação da eficiência na utilização de cortinas de turbidez para retenção de sólidos suspensos realizada em escala piloto

ABSTRACT This study aims to stimulate debate on the behavior of geotextile blankets in retaining suspended solids and to offer subsidies for further research. By means of a simple and objective approach, the results of a pilot-scale experiment are presented, with the objective of suggesting the use of containment barriers as a simple and inexpensive technique for raw water pre-filtration. Due to the growing demand for treated water and a marked decrease in the quality of the water available for catchment, it becomes necessary to increase the dosage of chemicals used in the treatment. Consequently, this influences not only the costs but also the characteristics of the waste generated in the process, since the nature and quantity of the sludge depend, among other factors, on the turbidity and the dosage of coagulant chemicals. The experiment was carried out using an acrylic channel where two adequately spaced geotextile blanket barriers were positioned, with raw water from the Parshall flume being pumped into the channel and, after passing through the barriers, returned by gravity to the flume and then sent for treatment. The affluent flow was maintained at 3.5 L/min and the blankets used had a weight of 170.0 and 420.0 g/m2, respectively. The results were not sufficient to conclude whether or not there is a relationship between the average raw water turbidity and the average turbidity reduction by the system. However, they show good chances of reducing sludge generation in water treatment plants receiving raw water pre-filtered by the proposed system, even with the average turbidity reduction considered low.

Insurance market transparency research trends: Bibliometric analysis

Transparency is a fundamental necessity for the insurance market in the modern fast-changing and digital world. The study aims to establish, based on bibliometric analysis, the research trends and subject areas of the insurance market transparency, including the impact of digital technologies, regulatory initiatives, and the internal policies of insurance companies. A bibliometric analysis of papers published in the journals indexed by the Scopus database for the years 1988–2023 was conducted to achieve this goal. Five clusters have been identified based on the analysis of the shared use of keywords, demonstrating the multidisciplinary nature of the research subject. They cover government regulation and risk management; ethics; technological innovations in increasing transparency; transparency of prices and costs in health insurance; and state medical insurance transparency. The analysis of insurance market transparency trends has allowed identifying four key stages of development: post-crisis regulatory mechanisms (2013–2016), Solvency II regulation effectiveness (2017–2019), transparency during the pandemic (2020–2021), and the impact of digital innovations since 2021. Spatial clustering made it possible to identify five groups of countries whose representatives are co-authors of research on insurance market transparency. The leading countries in research on insurance market transparency are the USA, the UK, and Germany. AcknowledgmentThis research was funded by the Ministry of Education and Science of Ukraine (projects No. 0122U000774 “Digitalization and transparency of public, corporate and personal finance: the impact on innovation development and national security”, No. 0123U101945 “National security of Ukraine through the prevention of financial fraud and money laundering: war and post-war challenges”). This research was funded under the research subsidy of the Faculty of Organization and Management of the Silesian University of Technology in Poland for the year 2023 (13/990/BK_23/0178).

Directed technical change, environmental sustainability, and population growth

Population growth has two potentially counteracting effects on pollution emissions: (i) more people imply more production and thereby more emissions, and (ii) more people imply a larger research capacity which might reduce the emission intensity of production, depending on the direction of research. This study investigates how to achieve a given climate goal in the presence of these two effects. A growth model featuring both directed technical change and population growth is developed. The model allows for simultaneous research in polluting and non-polluting technologies. Both analytical and numerical results indicate that population growth is a burden on the environment, even when all research efforts are directed toward non-polluting technologies. Thus, research subsidies alone cannot ensure environmental sustainability. Instead, the analysis highlights the importance of carbon taxes for climate change mitigation.

Debt financing of SMEs: The certification role of R&D Subsidies

This study investigates the (unintended) effects of public subsidies for research and development (R&D) on the debt financing of small and medium-sized enterprises (SMEs) by examining a public program implemented in the Marche region of Italy during the 2005–2012 period. The study combines matching methods with a difference-in-differences estimator to examine whether receiving public subsidies affects total indebtedness and the structure and cost of debt of awarded firms. The results indicate that R&D subsidies are associated with a modification of firm debt structure (especially for young, high-tech, and risky firms) in favor of long-term maturities and help firms limit the average cost of debt. Subsidies also foster the use of bank financing and reduce trade debt, but they do not affect the overall level of debt. Taken together, these findings suggest that the public funding of SME innovation projects plays a certification role in the access to external financial resources for firms receiving subsidies.

Fish fauna from the estuaries of Ceará state, Brazil: a checklist in support of conservation of the Brazilian semiarid coast

We provide extensive surveys in eight estuaries along the coast of Ceará State in Northeastern Brazil, including local samples and data compiled from online data bases and literature. Samplings resulted in a checklist of the estuarine fish fauna, which recorded 126 fish species, and provides original information of some estuaries. Most of the sampled marine species are widely distributed and many are important commercial species for the artisanal fisheries. The addition of records from existing inventories and online collections increases the number of species to 245, of which 11 are threatened (critically endangered or vulnerable) and six are introduced. Our study provides an updated list of fish species of the estuaries along the semiarid coast of Brazil and is intended as a subsidy for further research, conservation and management efforts.

Does institutional quality affect the impact of public agricultural spending on food security in Sub-Saharan Africa and Asia?

Due to declining or stagnating agricultural productivity and rising food insecurity, African countries agreed to dedicate ten percent of public spending to agriculture under the Maputo and Malabo declarations in 2003 and 2014, respectively. Similarly, Asian countries increased spending on agriculture via input subsidies for crop production, greater mechanisation, and research and development funds. These spending increases are happening in countries with varying levels of institutional quality, and hence, differences in observed outcomes. Using cereal prodution as proxy for the availability dimension of food security, we conduct a comprehensive empirical assessment of the impact of public agricultural spending on food security under heterogeneous institutional quality regimes. We estimate fixed effects models with robust standard errors using an unbalanced panel of 25 countries in Sub-Saharan Africa and Asia over 22 years. The preponderance of evidence suggests that institutional quality plays a significant mediating role on the impact of public agricultural spending on food security. Overall, the magnitude of change in cereal production due to public agricultural spending is larger for countries with higher institutional quality than for those with lower institutional quality. While public investment in agriculture enhances food security, its effectiveness is predicated on improvements in the quality of public institutions. High quality public institutions protect private physical and intellectual property and guide prudent use of public resources.

Anticorruption, Government Subsidies, and Innovation: Evidence from China

We leverage an exogenous shock—the crackdown on corrupt Chinese officials beginning in 2012—and examine how the allocation of research subsidies and innovative outcomes were affected. We argue that the staggered removal of provincial heads on corruption charges during China’s anticorruption campaign and the unanticipated departures of local government officials responsible for innovation programs led to plausibly exogenous reductions in corruption. After both events, the allocation of subsidies became more sensitive to firm merit than to corruption and subsidies became more strongly associated with future innovation. Anticorruption efforts and officials’ career incentives improved the efficacy of subsidy programs.This paper was accepted by Toby Stuart, entrepreneurship and innovation.Funding: This work was supported by the Harvard Business School, Toulouse Network on Information Technology, Major projects of the National Social Fund of China [Project 22ZDA047], and National Natural Science Foundation of China [Grants 71790601, 71722012].Supplemental Material: The data files and online appendix are available at https://doi.org/10.1287/mnsc.2022.4611 .

Potentials and Limitations of Subsidies in Sustainability Governance: The Example of Agriculture

The goals of the Paris Agreement and the Convention on Biological Diversity call for a global transition to sustainability. To achieve these goals, subsidies can be implemented. Subsidies are pervasive especially (but not only) in the agricultural sector. The agricultural sector plays an important role in the transition to sustainability as agriculture can both benefit and harm climate and biodiversity. Some agricultural subsidies seem environmentally beneficial, but the majority appear environmentally destructive. Against this background, this article applies a qualitative governance analysis—including aspects of legal analysis—to provide a comprehensive review of agricultural subsidies in the EU and to discuss the role of subsidies in transitioning towards sustainability. Results show that agricultural subsidies need to be substantially downscaled and implemented as complementary instruments only because other policy instruments such as quantity control instruments are more effective in addressing the drivers of non-sustainability, i.e., fossil fuels and livestock farming. However, subsidies remain a useful complementary instrument to remunerate the provision of public goods (e.g., in nature conservation) as long as they are constructed in a way that they do not suffer from typical governance problems. In addition, data and transparency need to be improved, subsidies for research and development increased, and environmental objectives streamlined through EU law to ensure all agricultural subsidies are in line with global environmental goals.

Firm R&D and financial analysis: How do they interact?

This paper demonstrates, theoretically and empirically, that firms’ research and development (R&D) efforts and investors’ analyses of their prospects are mutually reinforcing. Entrepreneurs attempt more research when financiers are better informed about projects’ profitability because they expect financiers to provide more funding to successful projects. Conversely, financiers collect more information about projects when entrepreneurs undertake more R&D because the opportunity cost of missing out on successful projects is then higher. Two natural experiments confirm that this interaction occurs and suggest that it contributes to about one third of the total effect of a policy designed to stimulate R&D. Overall, the analysis suggests that policies aimed at promoting R&D – such as research subsidies or tax breaks – have a multiplier effect owing to the induced improvement in capital efficiency. As a result, those policies can be rendered more effective by coupling them with other policies designed to increase capital efficiency. The feedback effect that we document also helps explaining why innovative ecosystems such as that in the Silicon Valley are challenging to set up.

Changes in the system of country’s population health care depending on the level of providing affordable housing

This paper is devoted to providing affordable housing as a significant factor in public health management, inclusive growth, and SDG. The purpose is to empirically prove changes in the system of country’s population health care depending on the level of providing affordable housing. The empirical base includes time series and panel data for 27 EU countries during 2011–2019. Due to correlation analysis (Shapiro-Wilk testing, Spearman or Pearson correlation, lags in time), regression analysis, and building a dynamic panel estimation model with Sargan testing in STATA, the study empirically confirmed and formalized the impact of affordable housing funding on changes in the system of country’s population health care. In particular, the study found the dependence between overcrowding level and the share of homeowners with mortgages (a decrease of overcrowding level by an average of 0.61% with a time lag of 2 years due to an increase by 1%); the share of tenants on concessional terms/free (0.41% with a time lag of 3 years); and the share of public spending on housing development (0.25% with a time lag of 3 years). The direct relationship between the overcrowding and mortality from dangerous diseases (tuberculosis, AIDS, viral hepatitis, mental and behavioral disorders, diabetes, pneumonia) was also revealed. Public spending on housing under social protection programs (subsidies, etc.) proved to be the least effective. Preference should be given to the development of affordable mortgage lending (faster and greater effect). Generally, it impacts public management decisions in the health care system, social, and housing spheres. AcknowledgmentsThe study was funded by the Ministry of Education and Science of Ukraine and performed the results of the project “Economic and mathematical modeling and forecasting, development of methodological and methodological foundations for creating a roadmap for reforming the health care system in Ukraine, taking into account behavioral, social, economic and legal determinants” (Agreement БФ / 24-2021).This study received funding under the research subsidy of the Department of Applied Social Sciences of the Faculty of Organization and Management of the Silesian University of Technology for the year 2022 (13/020/BK_22/0072).

Dynamic inefficiency by promoting relative consumption

AbstractI develop a dynamic model of consumption variety in status goods by introducing a realistic aspect that is new in the existing literature—that a good will not carry status appeal unless it is advertised. As advertisements will divert resources from new product research, growth in new products will be reduced. However, status-good advertisements also enhance distinctiveness of a good and increase a firm’s profit. This will motivate more researches. With the two effects offsetting each other, the original market bias in a standard product-development model—insufficient research due to a general knowledge spillover—cannot be overcome. While introducing advertising into models of this kind does not reverse the original welfare implication of suboptimal growth, this makes available a new and better intervention option—taxing advertisements. This tax is superior to consumption tax, the conventional solution to inefficient status competition, as consumption tax is found to be ineffective in the present model. It is also superior to research subsidies, the conventional solution to suboptimal growth, as subsidies must be financed and is not a self-sufficient policy.

Taxing Top Incomes in a World of Ideas

This paper considers top income taxation when (i) new ideas drive economic growth, (ii) the reward for successful innovation is a top income, and (iii) innovation cannot be perfectly targeted by a research subsidy—think about the business methods of Walmart, the creation of Uber, or the “idea” of Amazon. These conditions lead to a new force affecting the optimal top tax rate: by slowing the creation of new ideas that drive aggregate GDP, top income taxation reduces everyone’s income, not just income at the top. This force sharply constrains both revenue-maximizing and welfare-maximizing top tax rates.

R&D competition and the direction of innovation

We propose a model to show that when innovation in a given field becomes more lucrative, its direction can be distorted even though its rate rises. Higher payoffs attract innovators, making the R&D supply side more competitive. This competition endogenously shifts effort toward less promising but quicker-to-invent projects. We empirically quantify the magnitude of this distortion, in the context of pharmaceutical innovation during the Covid-19 pandemic. In the social planner solution, 74 percent more firms would have worked on vaccines and 17 percent more on novel compounds. Policy remedies include advance purchase commitments based on ex-ante value, targeted research subsidies, and antitrust exemptions for joint research ventures.

The COVID-19 pandemic and long-term incentives for developing vaccines: Patent law under stress.

Continents are facing an apocalyptic pandemic that is terribly dangerous for millions of their inhabitants. This paper seeks to address the role of intellectual property (IP) law in addressing the problem of the COVID‐19 pandemic. We suggest that the current international IP law regime and the Trade‐Related Aspects of Intellectual Property Rights Agreement are not insurmountable obstacles for access to a successful COVID‐19 vaccine. The publicly advocated fundamental reform or even abolition of the present IP law regime under serious information asymmetries might be counterproductive and distortive. Via existing compulsory licensing, advance purchase agreements and the employment of patent‐pools, research subsidies, reward mechanisms and reputational sanctions, governments can take the steps needed to effectively overcome any IP‐associated barriers to access to crucial medicines/vaccines, particularly during the COVID‐19 pandemic. Moreover, the current wave of medical research on COVID‐19 suggests the previous vaccine R&D ‘failures’ were driven by the modest demand for such vaccines and were not due to an inadequate IP‐incentive stream. The paper also suggests today's EU competition law rules on the horizontal exchange of information could be seen as an impediment to innovation and thus be temporary suspended.

Morphological Characteristics of Varieties of Sweet Potato, Cenoura, Margarita, Rainha and Roxa, Cultivated in Amazonas, Brazil

Sweet potato [Ipomoea batatas (L.) Lam.] is a nutritious food, from an easy-to-handle cultivation, present in all Brazilian regions, with great socioeconomic relevance. There is a wide genetic diversity of sweet potato, expressing different flesh and skin colors, and containing different nutritional values. However, only sweet potatoes with cream flesh and white or purple skin are present in the Manaus market. It is important to promote the visibility of the varieties that are being cultivated in a less expressive way, often only by the indigenous people. In this way, the valorization of the product and the conservation of agrobiodiversity will be encouraged. One obstacle to identifying varieties is that the same variety can have different names, and the same name can be given to different varieties. Therefore, it is essential that a morphological description of the varieties present locally is made. This will be a subsidy for future research and actions aimed at the development of the primary sector that has the sweet potato as its object. Given the above, this work aimed to morphologically describe the sweet potato varieties Cenoura, Margarita, Rainha and Roxa present at the Experimental Farm of the Federal University of Amazonas. The Cenoura, Rainha and Roxa varieties have different skin and/or flesh colors and a tuberous root shape, catering to different consumer tastes. The Cenoura variety (skin and orange flesh) has the potential to be cultivated by Amazonian farmers and introduced in the local market (Alves, 2021; Filgueira, 2008; Huamán, 1991).

Effects of R&D policy on income inequality in a growth model with heterogeneous assets and skills

This study examines how two R&D policy instruments: patent protection and research subsidies, affect income inequality in an endogenous growth model with households who possess heterogeneity in assets and skills. We find that the effect of strengthening patent protection on income inequality can be positive or U-shaped, whereas the effect of increasing research subsidies can be positive, negative, or U-shaped; these effects are disambiguated by the comparison between asset heterogeneity and skill heterogeneity.