How to Allocate R&D (and Other) Subsidies: An Experimentally Tested Policy Recommendation
This paper evaluates how R&D subsidies to the business sector are typically awarded. The authors identify two sources of ineciency: the selection based on a ranking of individual projects, rather than complete allocations, and the failure to induce competition among applicants in order to extract and use information about the necessary funding.
Link
http://www.gesy.uni-mannheim.de/dipa/108.pdf