I study how different types of subsidization affect investment decisions in a laboratory experiment. Even though the expected pro t is identical in all treatments, I find highly significant differences between them. In particular, when investment alternatives get subsidized with tax credits the...

Many governments use price and tax subsidization to meet social protection objectives. They endeavor to reduce the cost of living for their population-or for a subset of the population-by subsidizing the price of goods or services in lieu of, or in addition to, direct income transfers. While...