Cost-reducing R&D with spillovers and trade

Rajeev K. Goel, Shoji Haruna

Research output: Contribution to journalArticle

10 Citations (Scopus)

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 languageEnglish
Pages (from-to)314-326
Number of pages13
JournalJournal of Institutional and Theoretical Economics
Volume167
Issue number2
DOIs
Publication statusPublished - Jun 2011

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Costs
Spillover
Subsidies
Trade liberalization
Tax subsidies
Process innovation
International trade
Appropriability
Government
Strategic response
Research spillovers

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 journalArticle

Goel, Rajeev K. ; Haruna, Shoji. / Cost-reducing R&D with spillovers and trade. In: Journal of Institutional and Theoretical Economics. 2011 ; Vol. 167, No. 2. pp. 314-326.
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