A Joint Programme of Friedrich Schiller University and the Max Planck Institute of Economics, Jena
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Cantner 2012

Cantner U., S. Kösters, Picking Winners? – Empirical Evidence on the Targeting of R&D Subsidies to Start-ups, Small Business Economics, forthcoming

Abstract: This paper investigates the allocation of R&D subsidies given to start-ups. Considering the coexistence of various R&D project schemes, we take an aggregate view and analyze the determinants of the receipt of (any) R&D subsidies within the first three business years of the start-ups. We argue that policymakers and funding authorities follow a strategy of “picking the winner”. Analyzing start-ups in the East German state of Thuringia, we conduct logistic regressions and find ambiguous support. R&D subsidies are given to start-ups with innovative business ideas, especially academic spin-offs. Although the ambitions and patent stock of the founder(s) do not decide the receipt of R&D subsidies, team start-ups and the initial capital of a start-up tend to affect this decision positively. Hence, we cannot exclude a “picking the winner” strategy in targeting R&D subsidies to start-ups. More generally, however, the problems of policy targeting question the massive subsidization of private R&D. Keywords: Start-ups, R&D subsidies, Subsidy allocation JEL classification: O38, L26, L52

Cantner U., J. Krüger, R. Söllner, Product Quality, Product Price and Share Dynamics in the German Compact Car Market, Industrial and Corporate Change, forthcoming

Abstract: The present paper examines one of the central elements of evolutionary thinking - competition formalized by the replicator dynamics mechanism. Using data on product characteristics of automobiles sold on the German domestic market over the period 2001-2006, we construct a competitiveness or fitness indicator for each car model applying nonparametric efficiency measurement techniques. The basic question we intend to answer is whether cars providing a higher quality-price ratio for consumers tend to increase their market share compared to variants with lower quality-price ratios. The relationship between a car models' fitness and its market performance is empirically tested in a regression framework. The results show that the principle of `growth of the fitter' is working as suggested by evolutionary theory. In particular, we find that car models with considerably lower fitness than the market average lose, whereas models with above-average fitness gain additional market shares. Keywords: Replicator Dynamics, Product Characteristics, Data Envelopment Analysis JEL classification: O12, D12, L15