Optimal public funding for research: a theoretical analysis

De Fraja, Gianni Optimal public funding for research: a theoretical analysis. RAND Journal of Economics . ISSN 0741-6261 (In Press)

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This article studies how a government should distribute funds among research institutions and how it should allocate them to basic and applied research. Institutions differ in reputation and efficiency, and have an information advantage. The government should award funding for basic research to induce the most productive institutions to carry out more applied research than they would like. Institutions with better reputation do more research than otherwise identical ones, and applied research is inefficiently concentrated in the most efficient high reputation institutions. The article provides theoretical support for a dual channel funding mechanism, but not for full economic costing.

Item Type: Article
Additional Information: This is the pre-peer reviewed version of the following article: Optimal public funding for research: a theoretical analysis / Gianni De Fraja. RAND Journal of Economics, [data from publication], which has been published in final form at [Link to final article using the DOI]. This article may be used for non-commercial purposes in accordance with Wiley Terms and Conditions for Self-Archiving.
Schools/Departments: University of Nottingham UK Campus > Faculty of Social Sciences > School of Economics
Depositing User: De Fraja, Gianni
Date Deposited: 21 Oct 2015 15:09
Last Modified: 19 Sep 2016 18:42
URI: http://eprints.nottingham.ac.uk/id/eprint/30518

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