How does the type of subsidization affect investments: Experimental evidence

Hagen Ackermann

No 185, arqus Discussion Papers in Quantitative Tax Research from arqus - Arbeitskreis Quantitative Steuerlehre

Abstract: I study how different types of subsidization affect investment decisions in a laboratory experiment. Even though the expected pro t is identical in all treatments, I find highly significant differences between them. In particular, when investment alternatives get subsidized with tax credits the willingness to invest in the subsidized alternative increases remarkably. In addition, the willingness to take risks increases in general, when tax credits are introduced. Hence, tax credits might be more effective in promoting investments.

Keywords: behavioral economics; subsidies; tax incentives; distorting subsidization; real investment; risk-taking behavior (search for similar items in EconPapers)
JEL-codes: C91 D14 H25 (search for similar items in EconPapers)
Date: 2015
New Economics Papers: this item is included in nep-exp
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:zbw:arqudp:185

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