Public Policy for Venture Capital
AbstractThis paper proposes a simple partial equilibrium model to investigate the effects of government policy on venture capital backed investments. Giving up an alternative career, entrepreneurs focus their effort on a single, high risk venture each. Venture capitalists acquire an equity stake and offer a base salary as well. In addition to providing incentive compatible equity finance, they support the venture with managerial advice to raise survival chances. We analyze several policy measures addressed at venture capital activity: government spending on entrepreneurial training, subsidies to equipment investment, and output subsidies at the production stage. While these measures stimulate entrepreneurship, only cost-effective government services can improve welfare. Copyright Kluwer Academic Publishers 2001
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Bibliographic InfoArticle provided by Springer in its journal International Tax and Public Finance.
Volume (Year): 8 (2001)
Issue (Month): 4 (August)
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Web page: http://www.springerlink.com/link.asp?id=102915
venture capital; moral hazard; managerial advice; public policy;
Other versions of this item:
- Christian Keuschnigg & Søren Bo Nielsen, 2001. "Public Policy for Venture Capital," CESifo Working Paper Series 486, CESifo Group Munich.
- Christian Keuschnigg & Søren Bo Nielsen, . "Public Policy for Venture Capital," EPRU Working Paper Series 01-06, Economic Policy Research Unit (EPRU), University of Copenhagen. Department of Economics.
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Christian Keuschnigg & Søren Bo Nielsen, .
"Tax Policy, Venture Capital, and Entrepreneurship,"
EPRU Working Paper Series
00-18, Economic Policy Research Unit (EPRU), University of Copenhagen. Department of Economics.
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