Seminar CRENoS DECA - Lars Persson

27/06/2011 - 14:00 to 16:00


Aula Magna, Facoltà di Economia

Viale Sant'Ignazio 74, Cagliari 


Presentation of paper

When do independent innovators make the break-through inventions?




Lars Persson - Research Institute of Industrial Economics Stockholm





Erika Färnstrand Damsgaard, Pehr-Johan Norbäck, Lars Persson and Helder Vasconcelos


We propose a model where incumbents and entrepreneurs invest in research projects, and where the entrepreneurs face entry costs. We show that if entry costs are high, entrepreneurs choose research projects with lower probability of success and higher payoff than the incumbents'. The reason is that, by so doing, the entrepreneur can then avoid the high entry cost in the cases the project fails. We show that commercialization support to entrepreneurs not only increases entrepreneurial investment, but also induces entrepreneurs aim for less risky projects. Whereas R&D subsidies only increase entrepreneurial investment without affecting the project type



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