Many states provide firms with an investment tax credit that effectively reduces the price of capital. In

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Many states provide firms with an “investment tax credit” that effectively reduces the price of capital. In theory, these credits are designed to stimulate new investment and thus create jobs.

Critics have argued that if there are strong factor substitution effects, these subsidies could reduce employment in the state.

Explain their arguments.

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Principles Of Economics

ISBN: 9780593183540

10th Edition

Authors: Case, Karl E.;Oster, Sharon M.;Fair, Ray C

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Question Posted: Nov 12, 2024 05:01 AM

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Many states provide firms with an investment tax credit that effectively reduces the price of capital. In

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Principles Of Economics

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