Public-Private Technology Partnerships

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Abstract
The U.S. government has a long history of supporting private sector research and development (R & D). The economic justification for government R & D support is clear. Primarily because of knowledge spillovers, profit-maximizing firms invest less than the socially optimal level of R & D. This market failure creates the possibility that government can help mitigate the underinvestment problem. Public-private technology partnerships are the newest approach to funding R & D. Technology partnerships include public funding of industry-led R & D projects and private research consortia, and collaborations between industry and government scientists. These programs hope to generate research that yields commercial products and innovations. This article discusses the rise of these programs, the theory supporting them, the types of research projects they must fund to be successful, the technical and political obstacles they face in funding these projects, and the evaluations of the largest partnership programs. This article concludes with policy recommendations, recognizing that these programs have potential but must overcome significant hurdles.

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