Browsing by Author "Tanayama, Tanja"

Sort by: Order: Results:

Now showing items 1-5 of 5
  • Takalo, Tuomas; Tanayama, Tanja (2008)
    Bank of Finland Research Discussion Papers 19/2008
    Published in Journal of Technology Transfer, Volume 35, Number 1, February 2010: 16-41
    We study the interaction between private and public funding of innovative projects in the presence of adverse-selection based financing constraints. Government programmes allocating direct subsidies are based on ex-ante screening of the subsidy applications. This selection scheme may yield valuable information to market-based financiers. We find that under certain conditions, public R&D subsidies can reduce the financing constraints of technology-based entrepreneurial firms. Firstly, the subsidy itself reduces the capital costs related to innovation projects by reducing the amount of market-based capital required. Secondly, the observation that an entrepreneur has received a subsidy for an innovation project provides an informative signal to market-based financiers. We also find that public screening works more efficiently if it is accompanied by subsidy allocation. Keywords: adverse selection, innovation finance, financial constraints, R&D subsidies, certification JEL classification numbers: D82, G28, H20, O30, O38
  • Takalo, Tuomas; Tanayama, Tanja; Toivanen, Otto (2008)
    Bank of Finland Research Discussion Papers 7/2008
    Published in Review of Economics and Statistics, March 2013, Vol. 95, No. 1, Pages 255-272
    This paper studies the welfare effects of R&D subsidies. We develop a model of continuous optimal treatment with outcome heterogeneity where the treatment outcome depends on applicant investment. The model takes into account heterogeneous application costs and identifies the treatment effect on the public agency running the programme. Under the assumption of a welfare-maximizing agency, we identify general equilibrium treatment effects. Applyiing our model to R&D project-level data we find substantial treatment effect heterogeneity. Agency-specific treatment effects are smaller than private treatment effects. We find that the rate of return on subsidies for the agency is 30-50%. Keywords: applications, effort, investment, R&D, selection, subsidies, treatment programme, treatment effects, welfare JEL classification numbers: 038, 031, L53, C31
  • Takalo, Tuomas; Tanayama, Tanja; Toivanen, Otto (2013)
    Bank of Finland Research Discussion Papers 2/2013
    Published in International Journal of Industrial Organization, Volume 31, Issue 5, September 2013, Pages 634–642
    We extend the theoretical basis of the empirical literature on the effects of R&D subsidies by providing an estimable model of strategic interaction among subsidy applicants, and public and private sector R&D financiers. Our model incorporates fixed R&D costs and a cost of external finance. We derive the optimal support rule. At the intensive (extensive) margin the costs of external funding reduce (increase) the optimal subsidy rate. We also establish necessary and sufficient conditions for the existence of additionality. It turns out that additionality at the intensive margin is less likely with large spillovers. Our results suggest that the relationship between additionality and welfare may not be straightforward. Keywords: R&D, entrepreneurial finance, R&D subsidies, innovation policy JEL classification numbers: O38, O31, L32, H25, G28
  • Takalo, Tuomas; Tanayama, Tanja; Toivanen, Otto (2022)
    Bank of Finland Research Discussion Papers 2/2022
    We construct a model of innovation incorporating R&D externalities, R&D participation, financial market imperfections, and application and allocation of R&D subsidies, estimate it using Finnish R&D project level data and conduct a welfare analysis. The intensive, not the extensive R&D margin is important. Financial market imperfections are small.Tax credits and subsidies do not reach first best R&D but increase R&D 29-47% compared to laissez-faire. Welfare effects are small: Tax credits increase welfare 1%; subsidies reduce welfare once application costs are taken into accout. In terms of fiscal cost, tax credits are 90% more expensive than R&D subsidies.
  • Takalo, Tuomas; Tanayama, Tanja; Toivanen, Otto (2017)
    Bank of Finland Research Discussion Papers 30/2017
    We conduct a welfare analysis of R&D subsidies and tax credits using a model of innovation policy in corporating externalities, limited R&D participation and financial market imperfections. We estimate the model using R&D project level data from Finland. The optimal R&D tax credit rate (0.24) is lower than the average R&D subsidy rate (0.36). The intensive, not the extensive margin of R&D is important for policy. Tax credits and subsidies increase R&D investments and spillovers compared to laissez-faire but to levels below the first best. R&D support policies don't improve welfare.