NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Government Subsidies to Private Military R&D Investment: DOD's IR&D Policy

Frank R. Lichtenberg

NBER Working Paper No. 2745 (Also Reprint No. r1415)
Issued in October 1988
NBER Program(s):   PR   PE

A relatively obscure defense procurement policy establishes a large subsidy to private military R&D investment. On the surface, it appears that the marginal subsidy to such investment is zero, but this is only true in the short run. Due to DOD's policy of allowable-cost determination, the long-run subsidy is substantial. It is much larger, in fact, than the subsidy provided by the R&D Tax Credit enacted in 1981. I calculate the subsidy by estimating an econometric model using contractor-level data from the Defense Contract Audit Agency. This subsidy may have an important influence on the amount and character of privately financed innovation in the U.S.

download in pdf format
   (227 K)

email paper

Machine-readable bibliographic record - MARC, RIS, BibTeX

Document Object Identifier (DOI): 10.3386/w2745

Published: Defense Economics, Vol. 1, pp. 149-158, (1990).

Users who downloaded this paper also downloaded* these:
Lichtenberg w2720 IR&D Project Data and Theories of R&D Investment
Kelley and Cook w6460 The Institutional Context and Manufacturing Performance: The Case of the U.S. Defense Industrial Network
Aizenman and Glick w9618 Military Expenditure, Threats, and Growth
Trajtenberg w9725 Defense R&D Policy in the Anti-terrorist Era
Williamson The Economics of Defense Contracting: Incentives and Performance
 
Publications
Activities
Meetings
NBER Videos
Themes
Data
People
About

National Bureau of Economic Research, 1050 Massachusetts Ave., Cambridge, MA 02138; 617-868-3900; email: info@nber.org

Contact Us