Abstract
This article incorporates research spillovers and examines behavior of firms in a two-stage, international trade game with process innovation. Governments choose optimal research subsidies in stage 1, and firms take account of the subsidies in choosing research and production in stage 2. Results show that optimal research subsidies differ under spillovers and no spillovers. Strategic responses to foreign research subsidies uniquely occur in cases with spillovers. At certain spillover levels, the optimal R&D policy is a negative subsidy (tax). Findings regarding the effects of trade liberalization support earlier results with perfect appropriability, although the responses to trade liberalization are different with spillovers.
| Original language | English |
|---|---|
| Pages (from-to) | 314-326 |
| Number of pages | 13 |
| Journal | Journal of Institutional and Theoretical Economics |
| Volume | 167 |
| Issue number | 2 |
| DOIs | |
| Publication status | Published - Jun 2011 |
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ASJC Scopus subject areas
- Economics and Econometrics
Cite this
Cost-reducing R&D with spillovers and trade. / Goel, Rajeev K.; Haruna, Shoji.
In: Journal of Institutional and Theoretical Economics, Vol. 167, No. 2, 06.2011, p. 314-326.Research output: Contribution to journal › Article
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TY - JOUR
T1 - Cost-reducing R&D with spillovers and trade
AU - Goel, Rajeev K.
AU - Haruna, Shoji
PY - 2011/6
Y1 - 2011/6
N2 - This article incorporates research spillovers and examines behavior of firms in a two-stage, international trade game with process innovation. Governments choose optimal research subsidies in stage 1, and firms take account of the subsidies in choosing research and production in stage 2. Results show that optimal research subsidies differ under spillovers and no spillovers. Strategic responses to foreign research subsidies uniquely occur in cases with spillovers. At certain spillover levels, the optimal R&D policy is a negative subsidy (tax). Findings regarding the effects of trade liberalization support earlier results with perfect appropriability, although the responses to trade liberalization are different with spillovers.
AB - This article incorporates research spillovers and examines behavior of firms in a two-stage, international trade game with process innovation. Governments choose optimal research subsidies in stage 1, and firms take account of the subsidies in choosing research and production in stage 2. Results show that optimal research subsidies differ under spillovers and no spillovers. Strategic responses to foreign research subsidies uniquely occur in cases with spillovers. At certain spillover levels, the optimal R&D policy is a negative subsidy (tax). Findings regarding the effects of trade liberalization support earlier results with perfect appropriability, although the responses to trade liberalization are different with spillovers.
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U2 - 10.1628/093245611796589997
DO - 10.1628/093245611796589997
M3 - Article
AN - SCOPUS:80051696775
VL - 167
SP - 314
EP - 326
JO - Journal of Institutional and Theoretical Economics
JF - Journal of Institutional and Theoretical Economics
SN - 0932-4569
IS - 2
ER -