High Tech R&D Subsidies: Estimating the Effects of Sematech / Douglas A. Irwin, Peter J. Klenow.

Format:

Book

Author/Creator:

Irwin, Douglas A.

Contributor:

National Bureau of Economic Research.

Klenow, Peter J.

Series:

Working Paper Series (National Bureau of Economic Research) no. w4974.

NBER working paper series no. w4974

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Other Title:

High Tech R&D Subsidies

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 1994.

Summary:

Sparked by concerns about their shrinking market share, 14 leading U.S. semiconductor producers, with the financial assistance of the U.S. government in the form of $100 million in annual subsidies, formed a joint R&D consortium -- Sematech -- in 1987. Using Compustat data on all U.S. semiconductor firms, we estimate the effects of Sematech on members' R&D spending, profitability, investment, and productivity. In so doing we test two hypotheses: the `commitment' hypothesis that Sematech obligates member firms to spend more on high- spillover R&D, and the `sharing' hypothesis that Sematech reduces duplication of member R&D spending. Whereas the commitment hypothesis provides a rationale for the government subsidies, the sharing hypothesis does not. We find that Sematech induced members to cut their overall R&D spending on the order of $300 million per year, providing support for the sharing hypothesis.

Notes:

Print version record

December 1994.