Arbeitspapier
A Welfare Analysis on Start-Up Decisions under Default Risk
This short article studies the tax effects on a start-up investment decision under uncertainty. Since the representative firm can decide both when to invest and how much to borrow, the distortive effects are twofold. We thus show that the deadweight loss (namely, the ratio between the welfare loss and tax revenue) ranges from 25 to 32%, whereas mature firms face a lower distortion (as shown by Comincioli et al. (2021) the maximum deadweight loss is about 25%).
- Language
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Englisch
- Bibliographic citation
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Series: CESifo Working Paper ; No. 9478
- Classification
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Wirtschaft
Business Taxes and Subsidies including sales and value-added (VAT)
Bankruptcy; Liquidation
Corporate Finance and Governance: Government Policy and Regulation
- Subject
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real options
business taxation
default risk
- Event
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Geistige Schöpfung
- (who)
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Comincioli, Nicola
Panteghini, Paolo
Vergalli, Sergio
- Event
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Veröffentlichung
- (who)
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Center for Economic Studies and ifo Institute (CESifo)
- (where)
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Munich
- (when)
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2021
- Handle
- Last update
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10.03.2025, 11:43 AM CET
Data provider
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ZBW - Deutsche Zentralbibliothek für Wirtschaftswissenschaften - Leibniz-Informationszentrum Wirtschaft. If you have any questions about the object, please contact the data provider.
ZBW - Deutsche Zentralbibliothek für Wirtschaftswissenschaften - Leibniz-Informationszentrum Wirtschaft. If you have any questions about the object, please contact the data provider.
Object type
- Arbeitspapier
Associated
- Comincioli, Nicola
- Panteghini, Paolo
- Vergalli, Sergio
- Center for Economic Studies and ifo Institute (CESifo)
Time of origin
- 2021
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