Effectiveness of R&D tax incentives in small and large enterprises in Québec

By R. Baghana, Pierre Mohnen. 2009

155 citations recorded by the source corpus.

In this paper we evaluate the effectiveness of R&D tax incentives in Quebec, using manufacturing firm data from 1997 to 2003 originating from R&D surveys, annual surveys of manufactures and administrative data. The estimated price elasticity of R&D is –0.10 in the short run and –0.14 in the long run, with slightly higher elasticities for small firms than for large firms. We show that there is a deadweight loss associated with level-based R&D tax incentives that is particularly acute for large firms. For small firms it is not sizeable enough to suppress the R&D additionality, at least not for quite a number of years after the initial tax change. Incremental R&D tax credits do not suffer from this deadweight loss and are from that perspective preferable to level-based tax incentives.

Subfields: Economics and Econometrics

View Paper: https://www.semanticscholar.org/paper/00ad0fa72cbacf8d11eaed41aeaca219718cbf79

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In Economics and Econometrics

Citations in the corpus

What does it take for an R&D tax incentive policy to be effective? (2009, methodology): “This method has been used by Hall (1993), Bloom, Griffith and van Reenen (2002), Dagenais, Mohnen and Therrien (2004), Mairesse and Mulkay (2004), Wilson (2005), and Baghana and Mohnen (2009).”
The effects of public support schemes on small and medium enterprises (2015, background): “, 2011; Baghana and Mohnen, 2009; Bloom et al., 2002; Hall and Van Reenen, 2000; Mamuneas and Ishaq Nadiri 1996; Kobayashi, 2014). Unlike studies on the effect of tax incentives on the firms’ own R&D investments, microeconomic studies regarding the effect of tax credits on firms’ performance and inn”
Public R&D Policies and Private R&D Investment: A Survey of the Empirical Evidence (2015, background): “Baghana and Mohnen (2009) confirm the long-run elasticity of -0.14 for firms in the Canadian province Québec. Using a non-parametric matching approach, Czarnitzki, Hanel and Rosa (2011) conclude that R&D tax credits also have a positive impact on Canadian firms' decision whether to conduct any R&D a”
Tax incentives and R&D activity: Firm-level evidence from Taiwan (2012, background): “Examining the same issue for Canadian manufacturing firms over the 1997-2003 period, Baghana and Mohnen (2009) reach a contrasting result compared with the findings of Koga (2003).”