This path-breaking book addresses the economics of knowledge in universities and, in particular, asks how the changing structure of university research funding influences research behaviour. The author considers the relationship between the allocation of funds and university scientific research productivity and examines different aspects of European Union funding of university research. In particular, the impact of possible unintended consequences of university policies and priorities are studied. The author introduces an economic and historical approach to university research behaviour that allows one to evaluate the indirect consequences of the new 'competitive approach' to university behaviour and funding. Moreover, the book presents empirical evidence supporting the hypothesis that tighter linkages between university and industry, which aim to increase the transfer of knowledge, may produce unintended negative effects.This book will be of use to scholars of the economics of innovation and the economics of knowledge.