Public policy and the university-industry R&D nexus

This study addresses under-theorization of the Triple Helix hypothesis, which explains how public policies affect the production of basic science at universities and in governments and private firms, by presenting an economic model examining how public policies work to stimulate academic research and private firms’ R&D, and to enhance cooperation between private firms, governments and universities. More specifically, our model indicates which, and how, public policies related to past investments in science capital, stimulus of patenting efforts, innovation subsidies and regulation of researchers’ employment and compensation may lead to damped oscillations and the achievement of a stable equilibrium. Exploratory analysis employing NSF data on science and engineering doctorates and BLS data on oil and gas extraction employment not only supports some of the main features of our formal model, it is also consistent with both seminal and more recent research on the Triple Helix hypothesis.