Department of Agricultural and Resource Economics

The basic concern of this paper is the effect of private sponsorship of university research on the allocation of expenditures between public good research and commercial applications. Throughout the land-grant university system, there is much concern that as a result of reduced government funding, fundamental research will be neglected at the expense of research that is geared toward commercial applications. This paper attempts to shed some light on the relationship between research priorities and the availability of public funding for university research. In particular, we use both a static and a dynamic model to investigate the conditions under which university/private research partnerships can "crowd-in" or "crowd-out" basic science research as public funding becomes scarcer.