TY  - JOUR
AU  - Lichtenberg,Frank R.
TI  - Government Subsidies to Private Military R&D Investment:  DOD's IR&D    Policy
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 2745
PY  - 1990
Y2  - June 1990
UR  - http://www.nber.org/papers/w2745
L1  - http://www.nber.org/papers/w2745.pdf
N1  - Author contact info:
Frank R. Lichtenberg
Columbia University
504 Uris Hall
3022 Broadway
New York, NY  10027
Tel: 212/854-4408
Fax: (212) 854-9895
E-Mail: frl1@columbia.edu
AB  - 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.
ER  -