@techreport{NBERw4974,
 title = "High Tech R&D Subsidies: Estimating the Effects of Sematech",
 author = "Douglas A. Irwin and Peter J. Klenow",
 institution = "National Bureau of Economic Research",
 type = "Working Paper",
 series = "Working Paper Series",
 number = "4974",
 year = "1994",
 month = "December",
 URL = "http://www.nber.org/papers/w4974",
 abstract = {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.},
}