SUBSIDIZATION OF RISKY INVESTMENT UNDER INCOME TAXATION AND MORAL HAZARD

Vidar Christiansen

No 268392, Economic Research Papers from University of Warwick - Department of Economics

Abstract: A simplified version of an analysis by Mayshar (1977) is established in order to expose and explain the key factor behind the case for subsidizing private risky investment. A critical evaluation of the analysis motivates an extension of the model to incorporate moral hazard. It is demonstrated that the main conclusion of the former analysis carries over to the revised model under reasonable assumptions.

Keywords: Financial Economics; Risk and Uncertainty (search for similar items in EconPapers)
Pages: 15
Date: 1990-06-06
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Persistent link: https://EconPapers.repec.org/RePEc:ags:uwarer:268392

DOI: 10.22004/ag.econ.268392

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