I study how different types of subsidization affect investment decisions in a laboratory experiment. Even though the … investment alternatives get subsidized with tax credits the willingness to invest in the subsidized alternative increases …

We report laboratory experiments investigating the cyclicality of profit-enhancing investment in a competitive … environment. In our setting, optimal investment is counter-cyclical when investment costs fall following market downturns. However …, we do not observe counter-cyclical investment. Instead we see much less strategic behavior than our rational investment …