Arbeitspapier
Entrepreneurial innovations and taxation
In many countries entrepreneurship is promoted through tax reductions for small businesses and by various government support schemes. We analyze the effects of such policies to subsidize small businesses in a setting where both the risk-return characteristics of the selected innovation project and the mode of commercialization chosen by entrepreneurs (market entry versus sale to an incumbent firm) are endogenous. We show that government programs to support small businesses foster market entry by entrepreneurs but, at the same time, give an incentive to choose low risk projects, due to the existence of limited loss offset provisions. This points to a basic trade-off between the goals of raising competition in technology-intensive markets and the desire of governments to foster risky 'breakthrough' innovations.
- Language
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Englisch
- Bibliographic citation
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Series: CESifo Working Paper ; No. 3473
- Classification
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Wirtschaft
Business Taxes and Subsidies including sales and value-added (VAT)
Oligopoly and Other Imperfect Markets
New Firms; Startups
Innovation and Invention: Processes and Incentives
- Subject
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business taxation
innovation
market entry
Mittelstandspolitik
Klein- und Mittelunternehmen
Innovation
Unternehmensbesteuerung
Steuerbegünstigung
Markteintritt
Innovationspolitik
Innovationswettbewerb
Theorie
- Event
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Geistige Schöpfung
- (who)
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Haufler, Andreas
Norbäck, Pehr-Johan
Persson, Lars
- 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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2011
- Handle
- Last update
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10.03.2025, 11:45 AM CET
Data provider
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Object type
- Arbeitspapier
Associated
- Haufler, Andreas
- Norbäck, Pehr-Johan
- Persson, Lars
- Center for Economic Studies and ifo Institute (CESifo)
Time of origin
- 2011