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Public Subsidies and Cooperation in Research and Development. Evidence from the LAB

  • Antonio Acconcia , Sergio Beraldo ORCID logo , Carlo Capuano ORCID logo and Marco Stimolo EMAIL logo


We implement an experimental design based on a duopoly game in order to analyse the impact of public subsidies on the willingness to cooperate in research and development (R&D) activities. We first implement six experimental markets by exogenously varying the level of knowledge spillovers (low or high) and the intensity of competition in the product market (low, intermediate, or high). We find that the probability of cooperation increases in the level of spillovers and decreases in that of market competition. We then replicate the six experimental markets by subsidising subjects who cooperate. Whenever they are sufficient to change the incentive structure of the game, subsidies substantially increase the probability of cooperation, causing, however, a reduction of R&D investments. Overall, our evidence suggests that, depending on the characteristics of the market, the provision of subsidies is not always desirable. These might be redundant because firms have sufficient private incentives to invest cooperatively in R&D, or even counterproductive, as they might induce firms to significantly reduce R&D investments compared to the noncooperative scenario.

JEL Classification: L24; O3

Corresponding author: Marco Stimolo, Department of Economic and Social Sciences, Università Politecnica delle Marche, Piazzale R. Martelli, 8, 60121, Ancona, Italy, E-mail:

This article is the last work of Professor Carlo Capuano, who passed away after a long illness during which he never stopped smiling. To him and his family – his wife Francesca, his children Giulia and Alessandro – goes our fondest remembrance.



Funding support by POR Campania – European Social Fund (REPOS Project) – is gratefully acknowledged. This project is part of the activities of the project “Innovation, digitalization and sustainability for the diffused economy in central Italy” research unit of the Università Politecnica delle Marche, Department of Economic and Social Sciences, Ancona (Italy). We are grateful to an anonymous referee and one of the editors-in-chief of this journal for their helpful comments. We thank Alfredo Del Monte for his valuable support and the discussion he provided on the previous draft of this paper. We also thank Guido De Blasio, Valerio Filoso, John H. Kagel, Tommaso Reggiani for comments, as well as all the participants to the workshop “Experiments in Public Management Research” at the Masaryk University of Brno (February 2019), the Conference of the Society for the Advancement of Behavioral Economics (SABE) in Moscow (July 2020), and the Southern Europe Experimental Team’s Workshop in Naples (February 2020). Tomáš Miklánek of the University of Economics of Prague provided us with excellent research assistance and programming. The usual disclaimers apply.

  1. Research funding: Funding support by POR Campania – European Social Fund (REPOS Project) – is gratefully acknowledged.


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Supplementary Material

This article contains supplementary material (

Received: 2022-04-11
Accepted: 2023-05-23
Published Online: 2023-06-07

© 2023 Walter de Gruyter GmbH, Berlin/Boston

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