endogenous share opts for innovation and faces credit constraints in the subsequent expansion phase. We emphasize four results …: (i) R&D subsidies not only encourage innovation but also relax finance constraints and help innovative firms to exploit … investment of constrained firms by reducing free cash-flow and thereby discourage innovation. (iii) A revenue neutral increase in …

firm’s size on the incentives and behaviour of firms towards innovation. In particular we highlight the following findings … incentives to promote innovation in firms. (iii) Firm shareholders may have incentives to curtail innovation even if these …

regard to the capital gains tax, innovation subsidy, public R&D spending and other policy initiatives. …