Subsidy Entrepreneurs: An Inquiry into firms seeking public grants

PublikationArtikel (in press)
Anders Gustafsson, Daniel Halvarsson, Financing of Innovations, Firm subsidies Industrial policy Innovation policy Entrepreneurship, Patrik Gustavsson Tingvall


This paper studies the incentives and characteristics of firms that apply for, and eventually receive, one or multiple governmental grants intended to stimulate innovation and growth. The analysis departs from a contest model in which entrepreneurs are free to allocate their effort between production and seeking grants. The results suggest that highly productive entrepreneurs abstain from seeking grants, moderately productive firms allocate a share of their effort to grant seeking, and low-productivity firms allocate most resources to seeking grants. Due to their efforts in seeking grants, these low-productive subsidy entrepreneurs also have a relatively high probability of receiving the grants. Using comprehensive data over grants from the three largest grant-distributing agencies in Sweden, we find concordant evidence of a negative relation between the probability of receiving a grant and firm productivity. As we go from single- to multiple-grant-supported firms, this negative relation becomes more pronounced.

Halvarsson, D, Gustafsson, A. & Gustavsson Tingvall, P. (2020). Subsidy Entrepreneurs: An Inquiry into firms seeking public grants. Journal of Industry, Competition and Trade, 20, 439-478. DOI: 10.1007/s10842-019-00317-0

Liknande innehåll

Ratio Working Paper No. 354: Foreign Ownership and Transferring of Gender Norms
Working paperPublikation
Halvarsson, D., Lark, O. & Gustavsson Tingvall, P.


Publicerat i

Ratio Working Paper


In this paper, we study foreign ownership as a vehicle for transferring gender norms across international borders. Specifically, we analyze how the wage differential between men and women in Swedish firms is affected by the degree of gender inequality in the home country of foreign investors. The results suggest that gender norms of the home country matter—the gender wage gap in foreign-owned subsidiaries appears to increase with the degree of gender inequality prevailing in the investors’ home market. This finding is identified from within job-spell variation in wages and proves robust across a series of specifications.

Maximum Likelihood Estimation of Asymmetric Double Type II Pareto Distributions
Artikel (med peer review)Publikation
Halvarsson, D.



This paper considers a flexible class of asymmetric double Pareto distributions (ADP) that allows for skewness and asymmetric heavy tails. The inference problem is examined for maximum likelihood. Consistency is proven for the general case when all parameters are unknown. After deriving the Fisher information matrix, asymptotic normality and efficiency are established for a restricted model with the location parameter known. The asymptotic properties of the estimators are then examined using Monte Carlo simulations. To assess its goodness of fit, the ADP is applied to companies’ growth rates, for which it is favored over competing models.

Bureaucrats or Markets in Innovation Policy? – a critique of the entrepreneurial state
Artikel (med peer review)Publikation
Karlson, N., Sandström, C., & Wennberg, K.



This paper takes stock of recent suggestions that the state apparatus is a central and underappreciated actor in the generation, diffusion and exploitation of innovations enhancing growth and social welfare. We contrast such a view of “the entrepreneurial state” with theories and empirical evidence of the microeconomic processes of innovation in the modern economy which focus on well-functioning markets, free entry and competition among firms, and independent entrepreneurship as central mechanisms in the creation and dissemination of innovations. In doing so, we identify several deficiencies in the notion of an entrepreneurial state by showing that (i) there is weak empirical support in the many hundreds empirical studies and related meta analyses evaluating the effectiveness of active industrial and innovative policies, that (ii) these policies do not take account of the presence of information and incentive problems which together explain why attempts to address purported market failures often result in policy failures, and that (iii) the exclusive focus on knowledge creation through R&D and different forms of firm subsidies ignores the equally important mechanisms of knowledge dissemination and creation through commercial exploitation in markets. We discuss how a more theoretically well-founded focus on the state as investing in knowledge generation and securing the conditions of free and competitive markets will lead to a more innovative economy.

Visa fler

Ratio är ett fristående forskningsinstitut som forskar om hur företagandets villkor kan utvecklas och förbättras.

Sveavägen 59 4trp

Box 3203

103 64 Stockholm

Postgiro: 382621-1


Bankgiro: 512-6578