Public Investment and Industry Incentives in Life-Science Research

Posted: 27 Apr 2009

See all articles by Chenggang Wang

Chenggang Wang

Texas Tech University - Department of Agricultural and Applied Economics

Yin Xia

University of Missouri at Columbia - Agricultural and Applied Economics

Steven Buccola

Oregon State University - Department of Applied Economics

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Abstract

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.

Suggested Citation

Wang, Chenggang and Xia, Yin and Buccola, Steven, Public Investment and Industry Incentives in Life-Science Research. American Journal of Agricultural Economics, Vol. 91, No. 2, pp. 374-388, May 2009, Available at SSRN: https://ssrn.com/abstract=1375810 or http://dx.doi.org/10.1111/j.1467-8276.2008.01246.x

Chenggang Wang (Contact Author)

Texas Tech University - Department of Agricultural and Applied Economics ( email )

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Yin Xia

University of Missouri at Columbia - Agricultural and Applied Economics ( email )

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Steven Buccola

Oregon State University - Department of Applied Economics ( email )

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Corvallis, OR 97331-4501
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