Abstract
This article examines the impact of the R&D fiscal incentive programme on R&D by Dutch firms. Taking a factor demand approach, we measure the elasticity of firm R&D capital accumulation to its user cost. Econometric models are estimated using a rich unbalanced panel of firm data covering the period 1996 to 2004 with firm specific R&D user costs varying with tax incentives. Using the estimated user cost elasticity, we perform a cost-benefit analysis of the R&D incentive programme. We find some evidence of additionality suggesting that the level based programme of R&D incentives in the Netherlands is effective in stimulating firms' investment in R&D. However, the hypothesis of crowding out can be rejected only for small firms. The analysis also indicates that the level based nature of the fiscal incentive scheme leads to a substantial social deadweight loss.
Original language | English |
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Pages (from-to) | 1527-1538 |
Number of pages | 12 |
Journal | Applied Economics |
Volume | 44 |
Issue number | 12 |
Early online date | 9 Mar 2011 |
DOIs | |
Publication status | Published - 2012 |
Keywords
- INCENTIVES
- COUNTRIES
- PANEL
- COST