The objective of this paper is to contribute to the empirical literature that evaluates the effects of public R&D support on private R&D investment. We apply a matching approach to analyze the effects of public R&D support in Spanish manufacturing firms. We examine whether or not the effects are different depending on the firms' size and the technological level of the sectors in which the firms operate. We evaluate the effect of R&D subsidies on the subsidized firms, considering both the effect of subsidies on firms that would have performed R&D in the absence of public support and also the effect of inducement to undertake R&D activities. We also analyze the effect that concession of subsidies might have on firms which do not enjoy this type of support. The main conclusions indicate absence of "crowding-out", either full or partial, between public and private spending and that some firms-mainly small and operating in low technology sectors-might not have engaged in R&D activities in the absence of subsidies.

This paper analyzes the effects of R&D and worker training on innovation performance in a sample of Spanish manufacturing firms while distinguishing between large and small firms. Our findings suggest that R&D is a key factor in explaining firm innovation performance, and that worker training investment also has a significant effect, albeit one of less magnitude. The results confirm a complementary relationship: training reinforces the effect of R&D on innovation performance. The effects differ according to firm size and industry.

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It is well known that in most industries a significant proportion of firms do not perform innovative activities. Although empirical studies on the determinants of R&D often have taken this fact into account by considering the dependent variable as a censured one, there is not an explicit theoretical model to explain the zeros. The concern of this letter is to discuss a simple theoretical model where firms simultaneously decide whether to undertake or not R&D activities jointly with the level of the R&D investment. It is shown that a firm performs R&D activities only when its optimal level of R&D expenditure is higher than a threshold. Additionally, it is shown that both the probability of undertaking R&D activities and the R&D expenditure increase with market power, with the elasticity of demand with respect to quality and with the elasticity of quality with respect to R&D. Finally, from this simple theoretical framework we discuss a suitable econometric model that threats these decisions simultaneously.

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