Template-type: ReDIF-Paper 1.0
Author-Name: Baghana, Rufin
Author-Email: rufin.baghana@finances.gouv.qc.ca
Author-Workplace-Name: Ministere des Finances, Quebec
Author-Name: Mohnen, Pierre
Author-Email: mohnen@merit.unu.edu
Author-Workplace-Name: UNU-MERIT, Maastricht University, and CIRANO
Title: Effectiveness of R&D Tax Incentives in Small and Large Enterprises in Quebec
Abstract: 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 a 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 during 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.
Classification-JEL: O32, O38, H25, H50, C23
Keywords: R&D, tax credits, tax incentives, price elasticity, research and
	 development, manufacturing industry, Quebec, Canada
Series: UNU-MERIT Working Papers
Creation-Date: 2009
Number: 001
File-URL: http://www.merit.unu.edu/publications/wppdf/2009/wp2009-001.pdf
File-Format: application/pdf
File-Size: 275 Kb
Handle: RePEc:unm:unumer:2009001