yields an immediate tax benefit for one firm, but creates a net operating loss carryover for the other firm. We show that the … competitive environment. This occurs because if both firms invest in research, the firm with the net operating loss carryover …

generate a net operating tax loss carryover. Using an analytical model, we show that this conventional wisdom need not hold in … investment in R&D yields an immediate tax benefit for one firm, but creates a net operating loss carryover for the other firm. If … both firms invest in R&D, the firm with the net operating loss carryover makes more aggressive capital investment decisions …