Welfare effects of R&D support policies

Tuomas Takalo, Tanja Tanayama and Otto Toivanen

No 30/2017, Bank of Finland Research Discussion Papers from Bank of Finland

Abstract: 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 finanial market imperfetions. We estimate the model using R&D projet 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 poliy. Tax credits and subsidies inrease R&D investments and spillovers compared to laissez-faire but to levels below the first best. R&D support policies don't improve welfare.

JEL-codes: C31 L53 O31 O38 (search for similar items in EconPapers)
Date: 2017
Note: A revised version published on 18 Jan 2022 is available as BoF DP 2/2022.
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Citations: View citations in EconPapers (2)

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Related works:
Working Paper: Welfare effects of R&D support policies (2022)
Working Paper: Welfare Effects of R&D Support Policies (2017)
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:bofrdp:rdp2017_030

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