Abstract This research analyzes the effectiveness of the research and experimentation tax credit for a broad sample of firms over the period 1981 through 1985. The study stratifies firms according to their q ratios (Tobin and Brainard 1977) to test the hypothesis that the R that the OBRA'89 design of the credit may be even less cost effective; and that the current rate of credit is probably too low to provide an incentive for either firms with q less than one or firms with q greater than one.
Janet W. Tillinger (Sun,) studied this question.