Effectiveness of R&D tax incentives in small and large enterprises in Québec
AbstractIn this paper we evaluate the effectiveness of R&D tax incentives in Quebec, using manufacturing firm data from 1997 to 2003 originating from R&D surveys, annual surveys of manufactures and administrative data. The estimated price elasticity of R&D is -0.10 in the short run and -0.14 in the long run, with a slightly higher elasticities for small firms than for large firms. We show that there is a deadweight loss associated with level-based R&D tax incentives that is particularly acute for large firms. For small firms it is not sizeable enough to suppress the R&D additionality, at least not during quite a number of years after the initial tax change. Incremental R&D tax credits do not suffer from this deadweight loss and are from that perspective preferable to level-based tax incentives.
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Bibliographic InfoArticle provided by Springer in its journal Small Business Economics.
Volume (Year): 33 (2009)
Issue (Month): 1 (June)
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Web page: http://www.springerlink.com/link.asp?id=100338
Price elasticity of R&D; Quebec; R&D tax credits; O32; O38; H25; H50; C23; L26;
Other versions of this item:
- Rufin Baghana & Pierre Mohnen, 2009. "Effectiveness of R&D Tax Incentives in Small and Large Enterprises in Québec," CIRANO Working Papers 2009s-01, CIRANO.
- Baghana, Rufin & Mohnen, Pierre, 2009. "Effectiveness of R&D Tax Incentives in Small and Large Enterprises in Quebec," MERIT Working Papers 001, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).
- O32 - Economic Development, Technological Change, and Growth - - Technological Change; Research and Development; Intellectual Property Rights - - - Management of Technological Innovation and R&D
- O38 - Economic Development, Technological Change, and Growth - - Technological Change; Research and Development; Intellectual Property Rights - - - Government Policy
- H25 - Public Economics - - Taxation, Subsidies, and Revenue - - - Business Taxes and Subsidies
- H50 - Public Economics - - National Government Expenditures and Related Policies - - - General
- C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
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