Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/249023 
Year of Publication: 
2021
Series/Report no.: 
CESifo Working Paper No. 9478
Publisher: 
Center for Economic Studies and ifo Institute (CESifo), Munich
Abstract: 
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%).
Subjects: 
real options
business taxation
default risk
JEL: 
H25
G33
G38
Document Type: 
Working Paper
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