TY  - JOUR
AU  - Irwin,Douglas A.
AU  - Klenow,Peter J.
TI  - High Tech R&D Subsidies: Estimating the Effects of Sematech
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 4974
PY  - 1994
Y2  - December 1994
UR  - http://www.nber.org/papers/w4974
L1  - http://www.nber.org/papers/w4974.pdf
N1  - Author contact info:
Douglas A. Irwin
Department of Economics
Dartmouth College
Hanover, NH  03755
Tel: 603/646-2942
Fax: 603/646-2122
E-Mail: douglas.irwin@dartmouth.edu

Peter J. Klenow
Department of Economics
579 Serra Mall
Stanford University
Stanford, CA  94305-6072
Tel: 650/725-8169
Fax: NA
E-Mail: Pete@Klenow.net
M2  - featured in NBER digest on 1995-07-01
AB  - 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.
ER  -