Welfare effects of R&D support policies
Takalo, Tuomas; Tanayama, Tanja; Toivanen, Otto (16.10.2017)
Numero
30/2017Julkaisija
Bank of Finland
2017
Julkaisun pysyvä osoite on
https://urn.fi/URN:NBN:fi:bof-201710161631Tiivistelmä
We conduct a welfare analysis of R&D subsidies and tax credits using a model of innovation policy in corporating externalities, limited R&D participation and financial market imperfections. We estimate the model using R&D project level data from Finland. The optimal R&D tax credit rate (0.24) is lower than the average R&D subsidy rate (0.36). The intensive, not the extensive margin of R&D is important for policy. Tax credits and subsidies increase R&D investments and spillovers compared to laissez-faire but to levels below the first best. R&D support policies don't improve welfare.
Julkaisuhuomautus
A revised version published on 18 January 2022 is available as BoF DP 2/2022.