Optimal timing and capacity choice with taxes and subsidies under uncertainty
Autor(a) principal: | |
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Data de Publicação: | 2021 |
Outros Autores: | , |
Tipo de documento: | Artigo |
Idioma: | eng |
Título da fonte: | Repositório Científico de Acesso Aberto de Portugal (Repositórios Cientìficos) |
Texto Completo: | https://hdl.handle.net/1822/74972 |
Resumo: | We develop a real options model that examines the effect of government's subsidies and taxation policy on the timing and size of investments. We find that a higher depreciation rate or subsidy, or a lower tax rate, accelerates investments. The effect of subsidies on the investment size depends on whether the subsidy is fixed or variable: a fixed subsidy induces smaller size investments, whereas a variable subsidy encourages larger size investments. The tax and depreciation rates do not affect the size of the investment. For revenue-neutral incentive packages, the effect of changes in the above variables on the investment timing and size is not necessarily monotonic and it depends on the instrument of the taxsubsidy policy that is used to keep the new policy revenue neutral. There are also economic contexts in which an increase in the tax rate can accelerate investments of a larger scale. |
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Optimal timing and capacity choice with taxes and subsidies under uncertaintyCapacity choiceInvestment subsidyReal optionsTaxation policyUncertaintySocial SciencesScience & TechnologyWe develop a real options model that examines the effect of government's subsidies and taxation policy on the timing and size of investments. We find that a higher depreciation rate or subsidy, or a lower tax rate, accelerates investments. The effect of subsidies on the investment size depends on whether the subsidy is fixed or variable: a fixed subsidy induces smaller size investments, whereas a variable subsidy encourages larger size investments. The tax and depreciation rates do not affect the size of the investment. For revenue-neutral incentive packages, the effect of changes in the above variables on the investment timing and size is not necessarily monotonic and it depends on the instrument of the taxsubsidy policy that is used to keep the new policy revenue neutral. There are also economic contexts in which an increase in the tax rate can accelerate investments of a larger scale.Paulo J. Pereira and Artur Rodrigues acknowledge that this research has been financed by national funds of the FCT – Portuguese Foundation for Science and Technology within the projects UIDB/04105/2020 and UIDB/03182/2020, respectively.Pergamon-Elsevier Science LtdUniversidade do MinhoAzevedo, AlcinoPereira, Paulo J.Rodrigues, Artur20212021-01-01T00:00:00Zinfo:eu-repo/semantics/publishedVersioninfo:eu-repo/semantics/articleapplication/pdfhttps://hdl.handle.net/1822/74972engAzevedo, A., Pereira, P. J., & Rodrigues, A. (2021, July). Optimal timing and capacity choice with taxes and subsidies under uncertainty. Omega. Elsevier BV. http://doi.org/10.1016/j.omega.2020.1023120305-048310.1016/j.omega.2020.102312102312https://www.sciencedirect.com/science/article/pii/S0305048320306666info:eu-repo/semantics/openAccessreponame:Repositório Científico de Acesso Aberto de Portugal (Repositórios Cientìficos)instname:Agência para a Sociedade do Conhecimento (UMIC) - FCT - Sociedade da Informaçãoinstacron:RCAAP2024-01-13T01:25:41Zoai:repositorium.sdum.uminho.pt:1822/74972Portal AgregadorONGhttps://www.rcaap.pt/oai/openaireopendoar:71602024-03-19T19:26:49.777467Repositório Científico de Acesso Aberto de Portugal (Repositórios Cientìficos) - Agência para a Sociedade do Conhecimento (UMIC) - FCT - Sociedade da Informaçãofalse |
dc.title.none.fl_str_mv |
Optimal timing and capacity choice with taxes and subsidies under uncertainty |
title |
Optimal timing and capacity choice with taxes and subsidies under uncertainty |
spellingShingle |
Optimal timing and capacity choice with taxes and subsidies under uncertainty Azevedo, Alcino Capacity choice Investment subsidy Real options Taxation policy Uncertainty Social Sciences Science & Technology |
title_short |
Optimal timing and capacity choice with taxes and subsidies under uncertainty |
title_full |
Optimal timing and capacity choice with taxes and subsidies under uncertainty |
title_fullStr |
Optimal timing and capacity choice with taxes and subsidies under uncertainty |
title_full_unstemmed |
Optimal timing and capacity choice with taxes and subsidies under uncertainty |
title_sort |
Optimal timing and capacity choice with taxes and subsidies under uncertainty |
author |
Azevedo, Alcino |
author_facet |
Azevedo, Alcino Pereira, Paulo J. Rodrigues, Artur |
author_role |
author |
author2 |
Pereira, Paulo J. Rodrigues, Artur |
author2_role |
author author |
dc.contributor.none.fl_str_mv |
Universidade do Minho |
dc.contributor.author.fl_str_mv |
Azevedo, Alcino Pereira, Paulo J. Rodrigues, Artur |
dc.subject.por.fl_str_mv |
Capacity choice Investment subsidy Real options Taxation policy Uncertainty Social Sciences Science & Technology |
topic |
Capacity choice Investment subsidy Real options Taxation policy Uncertainty Social Sciences Science & Technology |
description |
We develop a real options model that examines the effect of government's subsidies and taxation policy on the timing and size of investments. We find that a higher depreciation rate or subsidy, or a lower tax rate, accelerates investments. The effect of subsidies on the investment size depends on whether the subsidy is fixed or variable: a fixed subsidy induces smaller size investments, whereas a variable subsidy encourages larger size investments. The tax and depreciation rates do not affect the size of the investment. For revenue-neutral incentive packages, the effect of changes in the above variables on the investment timing and size is not necessarily monotonic and it depends on the instrument of the taxsubsidy policy that is used to keep the new policy revenue neutral. There are also economic contexts in which an increase in the tax rate can accelerate investments of a larger scale. |
publishDate |
2021 |
dc.date.none.fl_str_mv |
2021 2021-01-01T00:00:00Z |
dc.type.status.fl_str_mv |
info:eu-repo/semantics/publishedVersion |
dc.type.driver.fl_str_mv |
info:eu-repo/semantics/article |
format |
article |
status_str |
publishedVersion |
dc.identifier.uri.fl_str_mv |
https://hdl.handle.net/1822/74972 |
url |
https://hdl.handle.net/1822/74972 |
dc.language.iso.fl_str_mv |
eng |
language |
eng |
dc.relation.none.fl_str_mv |
Azevedo, A., Pereira, P. J., & Rodrigues, A. (2021, July). Optimal timing and capacity choice with taxes and subsidies under uncertainty. Omega. Elsevier BV. http://doi.org/10.1016/j.omega.2020.102312 0305-0483 10.1016/j.omega.2020.102312 102312 https://www.sciencedirect.com/science/article/pii/S0305048320306666 |
dc.rights.driver.fl_str_mv |
info:eu-repo/semantics/openAccess |
eu_rights_str_mv |
openAccess |
dc.format.none.fl_str_mv |
application/pdf |
dc.publisher.none.fl_str_mv |
Pergamon-Elsevier Science Ltd |
publisher.none.fl_str_mv |
Pergamon-Elsevier Science Ltd |
dc.source.none.fl_str_mv |
reponame:Repositório Científico de Acesso Aberto de Portugal (Repositórios Cientìficos) instname:Agência para a Sociedade do Conhecimento (UMIC) - FCT - Sociedade da Informação instacron:RCAAP |
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Agência para a Sociedade do Conhecimento (UMIC) - FCT - Sociedade da Informação |
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RCAAP |
institution |
RCAAP |
reponame_str |
Repositório Científico de Acesso Aberto de Portugal (Repositórios Cientìficos) |
collection |
Repositório Científico de Acesso Aberto de Portugal (Repositórios Cientìficos) |
repository.name.fl_str_mv |
Repositório Científico de Acesso Aberto de Portugal (Repositórios Cientìficos) - Agência para a Sociedade do Conhecimento (UMIC) - FCT - Sociedade da Informação |
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1799132756781826048 |