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Toivanen Otto (Aalto) – "Welfare effects of R&D support policies"
CREST Microeconomics Seminar :
Date: 15th May 2019
Place: Room 3001.
Toivanen Otto (Aalto) – “Welfare effects of R&D support policies” with Tuomas Takalo (Bank of Finland) and Tanja Tanayama (EIB)
Abstract: 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 is lower than the average R&D subsidy rate. 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.
Roxana Fernandez Machado (CREST), Marie Laure Allain (CREST), and Linda Schilling (CREST)
food provided, no registration needed