The Benefits and Cost of Firm-Specific Investment Grants: A Study of Five Federal Programs

Dan Usher

Working Paper from Economics Department, Queen's University

Abstract: This paper attempts to identify the costs and benefits of programs of firm-specific investment grants. The benefits arise from a divergence between private and social returns, such as might occur when new products are created or when workers are employed in depressed regions. The primary cost is the leisure, consumption and investment foregone as a result of the tax required to finance the grants, which is compounded by the deadweight loss in tax collection. The existence of a program of subsidies might generate wasteful rent-seeking behaviour of would-be recipients.

Pages: 120
Date: 1982
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Persistent link: https://EconPapers.repec.org/RePEc:qed:wpaper:511

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