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Tax incentives for R&D and firm dynamics (in Finnish with English abstract and summary)


  • Määttänen, Niku
  • Maliranta, Mika


We compare different tax incentive schemes for private R&D investments using a numerical model of R&D-investments and firm dynamics. We find that tax incentives that are based on the incremental annual spending increase firms' R&D spending much more than tax incentives that are based on the level of R&D spending. However, incremental incentives also distort the allocation of R&D personnel across different firms much more than level-based tax incentives. This effect tends to lower aggregate output. We also find that whether the tax benefits are targeted to only profit-making firms, which pay corporate income tax, or given to all firms, does not make a big difference in terms of aggregate R&D spending or aggregate output.

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  • Määttänen, Niku & Maliranta, Mika, 2007. "Tax incentives for R&D and firm dynamics (in Finnish with English abstract and summary)," Discussion Papers 1065, The Research Institute of the Finnish Economy.
  • Handle: RePEc:rif:dpaper:1065

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    References listed on IDEAS

    1. Meyer, Martin, 2000. "Does science push technology? Patents citing scientific literature," Research Policy, Elsevier, vol. 29(3), pages 409-434, March.
    2. Michael L. Darby & Lynne G. Zucker, 2010. "Grilichesian Breakthroughs: Inventions of Methods of Inventing and Firm Entry in Nanotechnology," NBER Chapters,in: Contributions in Memory of Zvi Griliches, pages 143-164 National Bureau of Economic Research, Inc.
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    4. Harmon, Brian & Ardishvili, Alexander & Cardozo, Richard & Elder, Tait & Leuthold, John & Parshall, John & Raghian, Michael & Smith, Donald, 1997. "Mapping the university technology transfer process," Journal of Business Venturing, Elsevier, vol. 12(6), pages 423-434, November.
    5. Palmberg, Christopher & Nikulainen, Tuomo, 2006. "Industrial Renewal and Growth through Nanotechnology ? - An Overview with Focus on Finland," Discussion Papers 1020, The Research Institute of the Finnish Economy.
    6. Andrea Bonaccorsi & Grid Thoma, 2005. "Scientific and Technological Regimes in Nanotechnology: Combinatorial Inventors and Performance," LEM Papers Series 2005/13, Laboratory of Economics and Management (LEM), Sant'Anna School of Advanced Studies, Pisa, Italy.
    7. Isamel Rafols & Martin Meyer, 2006. "Knowledge-sourcing strategies for cross-disciplinarity in bionanotechnology," SPRU Working Paper Series 152, SPRU - Science and Technology Policy Research, University of Sussex.
    8. Bozeman, Barry, 2000. "Technology transfer and public policy: a review of research and theory," Research Policy, Elsevier, vol. 29(4-5), pages 627-655, April.
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    More about this item


    research and development; tax incentives; firm dynamics;

    JEL classification:

    • H25 - Public Economics - - Taxation, Subsidies, and Revenue - - - Business Taxes and Subsidies
    • O38 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Government Policy
    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms

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