---
title: "Tax incentives for R&D and firm dynamics (in Finnish with English abstract and summary)"
authors:
  - name: "Määttänen, Niku"
  - name: "Maliranta, Mika"
date_published: "2007-01-05"
series: "Discussion Papers no."
series_number: "1065"
jel_codes:
  - "H25"
  - "O38"
  - "L11"
language: "fi"
publisher: "ETLA Economic Research"
pdf_url: "https://www.etla.fi/wp-content/uploads/2012/09/dp1065.pdf"
keywords:
  - "tutkimus ja kehitys"
  - "verokannustimet"
  - "yritysdynamiikka"
identifier: "https://www.etla.fi/julkaisut/id/Discussion-Papers-no.-1065"
---

# Tax incentives for R&D and firm dynamics (in Finnish with English abstract and summary)

**Published:** 2007-01-05  
**Categories:** Publikationer  
**Tags:** Diskussionsämnen  
**URL:** https://www.etla.fi/sv/publikationer/dp1065-en/

We compare different tax incentive schemes for private R&D investments using a numerical model of R&D-investments and firm dynamics. We find that tax incentives that are based on the incremental annual spending increase firms’ R&D spending much more than tax incentives that are based on the level of R&D spending. However, incremental incentives also distort the allocation of R&D personnel across different firms much more than level-based tax incentives. This effect tends to lower aggregate output. We also find that whether the tax benefits are targeted to only profit-making firms, which pay corporate income tax, or given to all firms, does not make a big difference in terms of aggregate R&D spending or aggregate output.

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