<?xml version="1.0" encoding="UTF-8"?><xml><records><record><source-app name="Biblio" version="7.x">Drupal-Biblio</source-app><ref-type>17</ref-type><contributors><authors><author><style face="normal" font="default" size="100%">Larry D. Qiu</style></author><author><style face="normal" font="default" size="100%">Xu Wei</style></author><author><style face="normal" font="default" size="100%">Mohan Zhou</style></author><author><style face="normal" font="default" size="100%">Yi Zhou</style></author></authors></contributors><titles><title><style face="normal" font="default" size="100%">Resource, Competition, and the Equilibrium Effects of Innovation Subsidies</style></title><secondary-title><style face="normal" font="default" size="100%">Journal of Economic Behavior and Organization</style></secondary-title></titles><dates><year><style  face="normal" font="default" size="100%">2024</style></year></dates><urls><web-urls><url><style face="normal" font="default" size="100%">https://www.sciencedirect.com/science/article/pii/S0167268124001896</style></url></web-urls></urls><volume><style face="normal" font="default" size="100%">224</style></volume><pages><style face="normal" font="default" size="100%">297-322</style></pages><language><style face="normal" font="default" size="100%">eng</style></language><abstract><style face="normal" font="default" size="100%">We study the equilibrium effects of innovation subsidies that reduce firms'&amp;nbsp;innovation costs in a monopolistic competition model with firm heterogeneity in innovation capabilities and an industry-level resource constraint.&amp;nbsp;Subsidies change product market competition and resource price, and&amp;nbsp;further affect firms' innovation. We show a counterintuitive result:&amp;nbsp;though subsidies lower innovation costs, high-capability firms may reduce&amp;nbsp;their innovation. This finding implies that the demand curve for innovation investments of certain firms in equilibrium can be locally upward-sloping. We show that at the&amp;nbsp;industry level, both average innovation input and output demonstrate&amp;nbsp;inverted-U shaped responses to increasing subsidies but with differing&amp;nbsp;turning points. Notably, an increase in average innovation input may be&amp;nbsp;accompanied by a decrease in average innovation output. These findings cast&amp;nbsp;doubts on the interpretation of existing empirical evidences on firm and&amp;nbsp;industry responses to innovation subsidies, most of which assume away&amp;nbsp;treatment effect heterogeneity and&amp;nbsp;equilibrium feedbacks.</style></abstract></record></records></xml>