Haste makes waste? Quantity-based subsidies under heterogeneous innovations

• 成果类型: Article
• 署名作者: Cao, Linyi; Jiang, Helu; Li, Guangwei; Zhu, Lijun
• 署名单位: Shanghai University of Finance & Economics; ShanghaiTech University; Peking University
• 刊物名称: JOURNAL OF MONETARY ECONOMICS
• ISSN/ISSBN: 0304-3932
• DOI: 10.1016/j.jmoneco.2023.09.004
• 发表日期: 2024
• 关键词: Heterogeneous innovations; Quantity-based subsidies; human capital

摘要

With quantity -based innovation targets and subsidy programs launched since the mid -2000s, China has seen a patent surge, accounting for 46% of the world's total patent applications in 2020; however, the overall patent quality has been declining after 2008. This paper develops a Schumpeterian growth model featuring innovating firms' quantity-quality trade-off between radical and incremental innovations, and decomposes subsidies' aggregate impact into quantity and quality channels. We calibrate the model to Chinese firm -level data in the early 2010s. Our quantitative analysis shows that the quality channel effects are negative and dominant, and quantity -based subsidies in that period reduce the TFP growth rate and welfare by 0.19 percentage points and 3.31%, respectively. We evaluate welfare gains under a constrained planner's problem, and propose skill subsidies which are quality -biased and effectively recover the optimal allocation.