臺大管理論叢第31卷第2期

138 The Impact of the Act for the Development of Biotech and New Pharmaceuticals Industry on Firm Innovation in Taiwan projects and firms with more promising outcomes (David et al., 2000; Klette, Møen, and Griliches, 2000; Lach, 2002). Such premeditated selection by the government appears to violate the assumption of the effectiveness of government subsidies. Thus, since these papers do not consider the endogeneity of the sample selection, their results may be biased. By adopting new econometric techniques to control for selection bias, more recent studies are shifting away from the crowding-out effect of subsidies on private R&D to their stimulating effect on private R&D (Becker, 2015). Using a matching methodology for the samples, Czarnitzki and Hussinger (2004), Duguet (2004), and Carboni (2011) find that government subsidies have a positive effect on private R&D in German, French, and Italian firms, respectively. In addition, Aerts and Schmidt (2008) use a conditional DID estimator and also reject the crowding-out effect on private R&D in Flanders and Germany. Further, adopting a treatment analysis, Özçelik and Taymaz (2008) also support the additionality effect of government subsidies on private R&D in Turkish manufacturing firms. For Italian firms, Cerulli and Potì (2012) adopt matching methods and the DID estimator and also obtain a similar positive effect. Therefore, after controlling for the endogeneity problem, most empirical papers find that government subsidies did stimulate private R&D investments. 2.3 The Effect of Government Tax Credits on Innovation The policy on R&D tax credits is a more market-oriented method, since it permits firms to decide the amount and timing of investing in R&D activities. In theory, David et al. (2000) and Czarnitzki et al. (2011) use the relationship between marginal return of R&D and marginal cost of R&D to explain firms’ decisions to engage in private R&D. Both studies find tax credits decrease the marginal cost of R&D and thus result in higher private R&D investments. Namely, tax credits do not have crowding-out effects on private R&D because the tax credits shift the marginal cost curve downwards. Tax credits may thus result in two possible situations. First, tax credits may cause some firms that would not invest in R&D to engage in R&D investments instead when the marginal cost of R&D in these firms is greater than the marginal return of R&D. Second, the recipients of tax credits may be induced to infuse more investment projects with less profit. Under this micro-level framework, tax credits decrease the marginal cost of R&D. Thus, these two papers support the financial constraint hypothesis under which the tax credit ameliorates the financial constraint problem and increases R&D investments.

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