Setting the Budget for Targeted Research Projects

We consider a funding competition for targeted projects. Potential participants have stochastic opportunity costs, and do not know the number of competitors. The funding agency sets a budget cap indicating the maximum funding that participants may request. We show that raising the budget cap helps t...

Full description

Saved in:
Bibliographic Details
Published in:The B.E. journal of economic analysis & policy 2021-07, Vol.21 (3), p.1013-1034
Main Authors: De Chiara, Alessandro, Iossa, Elisabetta
Format: Article
Language:English
Subjects:
award budget
Budgets
competitive grants
Contests
Federal budget
Federal funding
Funding
O25
O30
O31
O38
Opportunity costs
procurement of innovation
project choice
research funding mechanisms
research tournaments
targeted funding
Citations: Items that this one cites
Online Access:Get full text
Tags: Add Tag
No Tags, Be the first to tag this record!
Description
Summary:We consider a funding competition for targeted projects. Potential participants have stochastic opportunity costs, and do not know the number of competitors. The funding agency sets a budget cap indicating the maximum funding that participants may request. We show that raising the budget cap helps to attract more participants but causes an increase in the requested funds. A higher budget cap is optimal when the preferences of researchers and the funding agency are more congruent, competition is lower, targeted projects have larger social value, the cost of public funds is smaller, or bidding preparation costs are lower.
ISSN:2194-6108
1935-1682
DOI:10.1515/bejeap-2020-0347