Research funding requires scientists. There's a relatively fixed supply of people who want to do research. Those who can get government or university jobs. Those who can't get jobs in the private sector. If you can't find any scientists, you don't employ any in your research lab.
This is an empirical observation, and isn't based on micro-economics, though you could frame it as such if you wanted. It's not true in all cases - Google might lure a few top computer scientists away from academia by giving them massive amounts of funding. See, academia has non-monetary rewards - the glory of working for as an academic (this may be a con), and government jobs look stable and for the public good (though libertarians might argue). Thus public funding secures the scares resource (talented scientists) at a lower cost, and private funding goes down (supply and demand, unless research happens to be a Giffen good, which I doubt).
This is an empirical observation, and isn't based on micro-economics, though you could frame it as such if you wanted. It's not true in all cases - Google might lure a few top computer scientists away from academia by giving them massive amounts of funding. See, academia has non-monetary rewards - the glory of working for as an academic (this may be a con), and government jobs look stable and for the public good (though libertarians might argue). Thus public funding secures the scares resource (talented scientists) at a lower cost, and private funding goes down (supply and demand, unless research happens to be a Giffen good, which I doubt).