R&D policies, trade and process innovation
We set up a simple trade model with two countries hosting one firm each. The firms invest in cost-reducing R&D, and each government may grant R&D subsidies to the domestic firm. We show that it is optimal for a government to provide higher R&D subsidies the lower the level of trade costs...
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| Veröffentlicht in: | Journal of international economics 2008, Vol.74 (1), p.170-187 |
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| container_title | Journal of international economics |
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| creator | Haaland, Jan I. Kind, Hans Jarle |
| description | We set up a simple trade model with two countries hosting one firm each. The firms invest in cost-reducing R&D, and each government may grant R&D subsidies to the domestic firm. We show that it is optimal for a government to provide higher R&D subsidies the lower the level of trade costs, even if the firms are independent monopolies. If firms produce imperfect substitutes, policy competition may become so fierce that only one of the firms survives. International policy harmonization eliminates policy competition and ensures a symmetric outcome. However, it is shown that harmonization is not necessarily welfare maximizing. The optimal coordinated policies may imply an asymmetric outcome with R&D subsidies to only one of the firms. |
| doi_str_mv | 10.1016/j.jinteco.2007.04.001 |
| format | Article |
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| fulltext | fulltext |
| identifier | ISSN: 0022-1996 |
| ispartof | Journal of international economics, 2008, Vol.74 (1), p.170-187 |
| issn | 0022-1996 1873-0353 |
| language | eng |
| recordid | cdi_proquest_miscellaneous_36787128 |
| source | Elsevier ScienceDirect Journals Complete - AutoHoldings; RePEc |
| subjects | Competition Economic models Harmonization Innovation Innovations International trade Process innovation R&D Research & development Research and development Studies Subsidies Trade |
| title | R&D policies, trade and process innovation |
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