Innovation, Trade, and Finance
Journal
American Economic Journal: Microeconomics
ISSN
1945-7669
ISSN-Digital
1945-7685
Type
journal article
Date Issued
2015-04
Author(s)
Abstract
Heterogeneous firms invest in R&D and expansion investment.Venture capital specializes in R&D financing where problems are largest. Marginal firms get funded by venture capital, while firms with larger debt capacity obtain cheaper bank financing. In the latestage, cash-rich firms invest at an optimal scale, while cash-poor
firms are restricted. A country's financial and institutional development determines entry and expansion of firms and their comparative advantage in producing innovative goods. We illustrate how tariffs, R&D subsidies, institutional reform and venture capital improve access to capital, expand innovative industries, boost national welfare and may result in ambiguous international welfare spillovers.
firms are restricted. A country's financial and institutional development determines entry and expansion of firms and their comparative advantage in producing innovative goods. We illustrate how tariffs, R&D subsidies, institutional reform and venture capital improve access to capital, expand innovative industries, boost national welfare and may result in ambiguous international welfare spillovers.
Language
English
Keywords
JEL D21
F11
F13
G24
G32
O32
HSG Classification
contribution to scientific community
Refereed
Yes
Publisher
American Economic Association
Publisher place
Nashville, Tenn.
Volume
7
Number
2
Start page
121
End page
157
Pages
37
Subject(s)
Eprints ID
234831