Demand-side vs. supply-side technology policies: Hidden treatment and new empirical evidence on the policy mix

• Published in: Research policy Vol. 44; no. 3; pp. 726 - 747
• Main Authors: Guerzoni, Marco, Raiteri, Emilio
• Format: Journal Article
• Language: English
• Published: Amsterdam Elsevier B.V 01.04.2015; Elsevier Sequoia S.A
• Subjects: Confounding effect; Crowding-out; Empirical research; Fiscal policy; Government purchasing; Hidden treatment; Innovation; Organizational behavior; Organizational behaviour; Propensity score matching; Public procurement; R&D subsidies; Research & development expenditures; Studies; Subsidies; Tax credits; Technological change; Technology policy; Propensity score matching; Hidden treatment; R&D subsidies; Confounding effect; Public procurement; Crowding-out
• ISSN: 0048-7333; 1873-7625
• DOI: 10.1016/j.respol.2014.10.009

•This paper provides empirical evidence about the impact of innovative public procurement upon firms’ innovative behaviour.•This paper makes use of a quasi-experimental setting as it is done in R&D policy evaluation.•Previous studies on R&D subsidies, not taking into account other policy options in the policy mix, suffered of hidden treatment bias and overestimated their impact.•We replicate existing results and show that they do not hold when innovative public procurement is also taken into account.•We advocate for an approach in policy evaluation which takes into account the policy mix. This paper provides new empirical evidence about the impact of various technological policies upon firms’ innovative behaviour. We take into consideration the role of policies for innovative activities and we focus on their interaction. While supply-side policies such as R&D subsidies and tax credits have been both extensively discussed in the literature and empirically investigated, the analysis of innovative public procurement is a growing trend in the literature, which still lacks robust empirical evidence. In this paper, we replicate the existing results on supply-side policies, surmise fresh empirical evidence on the outcome of innovative public procurement, and address the issue of possible interaction among the various tools. When controlling for the interaction with other policies, supply-side subsidies cease to be as effective as reported in previous studies and innovative public procurement seems to be more effective than other tools. The preliminary evidence suggests that technology policies exert the highest impact when different policies interact.