Subsidizing Start-Ups: Policy Targeting and Policy Effectiveness

Start-up subsidies are a frequently employed policy instrument, the use of which is justified by alleged market failure resulting from positive external effects and capital market imperfections. This article investigates whether the allocation of subsidies reflects a policy focus on addressing these market failure occurrences. However, using survey data from the East German state of Thuringia, logistic regressions reveal a rather random subsidization of start-ups. Furthermore, propensity score matching suggests that subsidized start-ups would have survived and thrived in any case, an indication of deadweight losses of start-up subsidies. The analysis points to serious information problems arising when subsidies should be allocated to remedy market failure. Making the situation even more problematic is that failure to precisely target start-up subsidies is likely to result in market distortions and ineffectiveness.Start-ups, Subsidies, Subsidy allocation, Policy evaluation

The quenched invariance principle for random walks in random environments admitting a bounded cycle representation

We derive a quenched invariance principle for random walks in random environments whose transition probabilities are defined in terms of weighted cycles of bounded length. To this end, we adapt the proof for random walks among random conductances by Sidoravicius and Sznitman (Probab. Theory Related Fields 129 (2004) 219--244) to the non-reversible setting.Comment: Published in at http://dx.doi.org/10.1214/07-AIHP122 the Annales de l'Institut Henri Poincar\'e - Probabilit\'es et Statistiques (http://www.imstat.org/aihp/) by the Institute of Mathematical Statistics (http://www.imstat.org

Picking the Winner? - Empirical Evidence on the Targeting of R&D Subsidies to Start-ups

This paper investigates the allocation of R&D subsidies given to start-ups. Considering the coexistence of various R&D project schemes, we take an aggregate view and analyze the determinants of the receipt of (any) R&D subsidies within the first three business years of the start-ups. We argue that policymakers and funding authorities follow a strategy of "picking the winner". Analyzing a unique data set of start-ups in the East German state of Thuringia, we conduct logistic regressions and find ambiguous support. R&D subsidies are given to start-ups with innovative business ideas, especially academic spin-offs. On the other hand, the ambitions and the patent stock of the founder(s) do not decide the receipt of R&D subsidies. These insights into the overall allocation of R&D subsidies are important since they have implications for policy effectiveness and efficiency. The implied difficulties of policy targeting fundamentally question the massive subsidization of private R&D.Start-ups, R&D subsidies, Subsidy allocation

Building Winners? An Empirical Evaluation of Public Business Assistance in the Founding Process

This paper investigates economic and subjective effects of public business assistance delivered to nascent entrepreneurs in Germany. Employing cluster analysis, we explore the actual scope and intensity of business assistance used. Then we analyze predictors of take-up and perceived usefulness taking into account the different patterns of utilized assistance. Finally, we assess economic effects by studying subsequent business performance employing propensity score matching. We cannot reveal that business assistance translates into better start-up performance. However, we find that a lack of personal entrepreneurial resources predicts take-up of business assistance in general as well as perceived usefulness of comprehensive business assistance.entrepreneurship, business assistance, policy evaluation, entrepreneurial resources, big five

The US dollar, the euro, and the yen: An evaluation of their present and future status as international currencies

The process of European integration and especially the introduction of the euro as the single currency for up to now 12 member countries of the EU in 1999 may alter the existing clear currency hierarchy. The euro area is comparable in size to the US with respect to GDP and even exceeds the US regarding the share in world trade. Thus questions arise of whether the international monetary system turns out to be bipolar in the long run or whether the yen can also play its part. It turns out that real activity, size and sophistication of financial markets, monetary and financial stability and inertia are the most prominent characteristics making a currency to be preferred on a world-wide level. We thus conclude that the integration and the development of European financial markets are of special importance for a stronger international role of the dollar, but that the historical experience of only gradually changing supremacy of international currencies still applies.International currencies; Dollar; Euro

Holography in commercially available photoetchable glasses

Volume holographic gratings are recorded and retrieved in two commercially available glasses: Schott Foturan and Hoya PEG3. These materials are photoetchable, which describes their major application, but they also allow storage of volume holograms without any chemical etching. The samples are illuminated with ultraviolet light at a wavelength of 325 nm and thermally processed to achieve a maximum diffraction efficiency of approximately 9% for a 1-mm-thick sample. The two glasses show similar behavior; the diffraction efficiencies in Foturan tend to be slightly larger, whereas PEG3 tends to have weaker light scattering