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Tax incentives and firm size : effects on private R&D investment in Spain

Author

Listed:
  • Labeaga Azcona J.
  • Martínez-Ros E.
  • Mohnen P.

    (UNU-MERIT)

Abstract

The use of fiscal policy instruments to stimulate private RD is widespread and important in some countries like Spain. In this paper we explore the effectiveness of RD tax incentives on knowledge capital accumulation in Spanish manufacturing firms using an unbalanced panel and compare the estimates based on claimed and claimable tax reductions. We find that while large firms use the programme more than small ones, the impact of the programme measured by the price elasticity is smaller for large firms than for SMEs. The price elasticities are higher when the ex-ante claimable tax reductions rather than the ex-post actually claimed tax eductions are used to compute the user cost of RD.

Suggested Citation

  • Labeaga Azcona J. & Martínez-Ros E. & Mohnen P., 2014. "Tax incentives and firm size : effects on private R&D investment in Spain," MERIT Working Papers 2014-081, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).
    • Handle: RePEc:unm:unumer:2014081
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    References listed on IDEAS

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    2. Emmanuel Duguet, 2012. "The effect of the incremental R&D tax credit on the private funding of R&D an econometric evaluation on french firm level data," Revue d'économie politique, Dalloz, vol. 122(3), pages 405-435.
    3. Pere Arqué-Castells & Pierre Mohnen, 2015. "Sunk Costs, Extensive R&D Subsidies and Permanent Inducement Effects," Journal of Industrial Economics, Wiley Blackwell, vol. 63(3), pages 458-494, September.
    4. Mansfield, Edwin, 1986. "The R&D Tax Credit and Other Technology Policy Issues," American Economic Review, American Economic Association, vol. 76(2), pages 190-194, May.
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    7. Cappelen, Ådne & Raknerud, Arvid & Rybalka, Marina, 2012. "The effects of R&D tax credits on patenting and innovations," Research Policy, Elsevier, vol. 41(2), pages 334-345.
    8. John Shea, 1997. "Instrument Relevance in Multivariate Linear Models: A Simple Measure," The Review of Economics and Statistics, MIT Press, vol. 79(2), pages 348-352, May.
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    Cited by:

    1. Benjamin Montmartin & Marcos Herrera & Nadine Massard, 2015. "R&D Policies in France: New Evidence from a NUTS3 Spatial Analysis," GREDEG Working Papers 2015-26, Groupe de REcherche en Droit, Economie, Gestion (GREDEG CNRS), Université Côte d'Azur, France.
    2. Alessandro Sterlacchini & Francesco Venturini, 2019. "R&D tax incentives in EU countries: does the impact vary with firm size?," Small Business Economics, Springer, vol. 53(3), pages 687-708, October.
    3. Heike Belitz, 2015. "Steuerliche Förderung von Forschung und Entwicklung: Erfahrungen aus dem Ausland," DIW Roundup: Politik im Fokus 85, DIW Berlin, German Institute for Economic Research.
    4. Blandinieres, Florence & Steinbrenner, Daniela & Weiß, Bernd, 2020. "Which design works? A meta-regression analysis of the impacts of R&D tax incentives," ZEW Discussion Papers 20-010, ZEW - Leibniz Centre for European Economic Research.
    5. OKAMURO, Hiroyuki & SAKUMA, Yohei, 2021. "The Effects of R&D Tax Incentive Reform on R&D Expenditures: The Case of 2009 Reform in Japan," TDB-CAREE Discussion Paper Series E-2021-04, Teikoku Databank Center for Advanced Empirical Research on Enterprise and Economy, Graduate School of Economics, Hitotsubashi University.
    6. Labeaga, José M. & Martínez-Ros, Ester & Sanchis, Amparo & Sanchis, Juan A., 2021. "Does persistence in using R&D tax credits help to achieve product innovations?," Technological Forecasting and Social Change, Elsevier, vol. 173(C).
    7. Silvia Appelt & Matej Bajgar & Chiara Criscuolo & Fernando Galindo-Rueda, 2025. "How effective are R&D tax incentives? Reconciling micro and macro evidence," CEP Discussion Papers dp2071, Centre for Economic Performance, LSE.
    8. Blandinieres, Florence & Steinbrenner, Daniela, 2021. "How does the evolution of R&D tax incentives schemes impact their effectiveness? Evidence from a meta-analysis," ZEW Discussion Papers 21-020, ZEW - Leibniz Centre for European Economic Research.

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    More about this item

    Keywords

    Business Taxes and Subsidies; Fiscal Policies and Behavior of Economic Agents; Management of Technological Innovation and R&D;
    All these keywords.

    JEL classification:

    • H25 - Public Economics - - Taxation, Subsidies, and Revenue - - - Business Taxes and Subsidies
    • H32 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Firm
    • O32 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Management of Technological Innovation and R&D

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