Public Policy and Venture Capital Backed Innovation
CESifo, Munich, 2003
CESifo Working Paper No. 1066
![](https://cesifo.org/DocImg/cesifo1_wp1066.jpg?c=1689236847)
This paper discusses the role of public policy towards the venture capital industry. The model emphasizes four margins: supply of entrepreneurs due to career choice, entry of venture capital funds and search for investment opportunities, entrepreneurial effort and venture capital advice during the start-up period, and introduction of new goods by successful start-ups. The paper considers short- and long-run comparative static and welfare effects of policy reform with regard to capital gains taxation, innovation subsidies, public R&D spending and other policy initiatives.