Guaranteed Demand and Corporate R&D

• 成果类型: Article; Early Access
• 署名作者: Belenzon, Sharon; Cioaca, Larisa
• 署名单位: Duke University; National Bureau of Economic Research; Tulane University
• 刊物名称: MANAGEMENT SCIENCE
• ISSN/ISSBN: 0025-1909
• DOI: 10.1287/mnsc.2023.00087
• 发表日期: 2025
• 关键词: Government procurement; R&D Contracts; guaranteed demand; upstream R&D; corporate science

摘要

The U.S. government incentivizes firms to develop innovative technologies by awarding research and development (R&D) contracts that often carry an implicit promise of guaranteed demand. Firms that demonstrate strong technological capabilities are rewarded with noncompetitive production contracts for the resulting products and services. Using newly assembled data on $4.2 trillion in government procurement contracts from all federal agencies, matched to U.S. publicly traded firms, we document a crowding-in effect, where government R&D contracts lead to increased investment in corporate scientific research. This effect is concentrated in large, vertically integrated firms and limited to upstream R&D. We argue that these patterns are best explained by a guaranteed demand mechanism: Firms co-invest in upstream research when success offers a credible path to future noncompetitive production contracts. We develop a theoretical framework to explain when it is optimal for the government to bundle R&D and production contracts. Our analysis shows that guaranteed demand can produce higher quality at a lower total cost for upstream R&D projects when the R&D firms have production capabilities. Our empirical results support these predictions. Additionally, we find that the crowding-in effect has weakened over time as the government has increasingly decoupled R&D contracts from production contracts. We discuss the potential implications of this decoupling.