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Benefit-Cost Analysis of Federal and Provincial SR&ED Investment Tax Credits

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  • John Lester

    (The School of Public Policy)

Abstract

There is a sound public policy case for subsidizing R&D. When firms perform R&D, they create knowledge that allows them to introduce new products, improve existing goods and services or reduce production costs. However, some of the knowledge created inevitably leaks out or spills over to other firms, allowing them to reap benefits from R&D without performing it themselves. These spillover benefits improve Canada’s overall economic performance, but firms do not consider them when deciding how much to invest in R&D, so a subsidy to encourage more R&D is the right policy response.

Suggested Citation

  • John Lester, 2021. "Benefit-Cost Analysis of Federal and Provincial SR&ED Investment Tax Credits," SPP Research Papers, The School of Public Policy, University of Calgary, vol. 14(1), January.
    • Handle: RePEc:clh:resear:v:14:y:2021:i:1
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    File URL: https://www.policyschool.ca/wp-content/uploads/2021/01/Tax-Credits-Lester.pdf
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    References listed on IDEAS

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