Publicación en 
con la participación de nuestro investigador:
Martín Pereyra, junto a Liliana Gelabert y Flavia Roldán.
ABSTRACT
We examine the role of the distribution of public support within sectors on firms’ innovation efforts. Our empirical analysis shows that how public support is allocated within a sector affects firms’ incentives to undertake innovation expenditures. Using data from Uruguay, we find that when public support for innovation activities is more uniformly distributed within a sector, firms that intermittently engage in innovation activities decrease their innovation expenditures, regardless of whether they are direct support recipients. These findings uncover a new indirect mechanism through which innovation policies influence firms’ incentives to undertake private innovation activities by shaping beliefs about the level of innovation activity of a firm’s competitors through a signaling effect of public support dispersion.
KEYWORDS: Innovation policy; innovation expenditures; pillover effects; competition; Latin America
JEL Codes: L10, L12