IDEAS home Printed from https://ideas.repec.org/a/eee/jeborg/v219y2024icp1-24.html
   My bibliography  Save this article

Unintended effects of tax incentives on firms’ strategic patenting

Author

Listed:
  • Dai, Xiaoyong
  • Wang, Mengqi

Abstract

This paper investigates the unintended effects of a tax incentive program on firms’ strategic patenting behavior in China. The program reduces the corporation income tax rate for firms certified as high- and new-technology enterprises. Firms must meet patent requirements to be eligible for the program. We employ an event-study design to examine firms’ patenting behavior around certification events. Results show that firms strategically increase utility model patent applications in the pre-certification year but do not increase invention and design patents. The strategic increase in utility model patent applications is to meet the patent requirements, but strategic patenting is neither associated with a real increase in R&D activities nor represents substantive innovation outputs. The strategic patenting behavior is more evident for less innovative firms, private firms, non-first-time certification users, and firms in non-priority industries. Our study highlights the importance of understanding firms’ behavioral responses for the evaluation and design of tax incentive programs.

Suggested Citation

  • Dai, Xiaoyong & Wang, Mengqi, 2024. "Unintended effects of tax incentives on firms’ strategic patenting," Journal of Economic Behavior & Organization, Elsevier, vol. 219(C), pages 1-24.
    • Handle: RePEc:eee:jeborg:v:219:y:2024:i:c:p:1-24
    DOI: 10.1016/j.jebo.2024.01.009
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0167268124000155
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.jebo.2024.01.009?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:jeborg:v:219:y:2024:i:c:p:1-24. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/jebo .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.