University of Cambridge > Talks.cam > Economics & Policy Seminars, CJBS > WELFARE EFFECTS OF R&D SUPPORT POLICIES

WELFARE EFFECTS OF R&D SUPPORT POLICIES

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There will be a light lunch available, for those attending the seminar, in the conference reception at 12:00-13:00

We conduct a welfare analysis of R&D subsidies and tax credits using a model of innovation policy incorporating 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.

This talk is part of the Economics & Policy Seminars, CJBS series.

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