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A Decision Theoretic Model of Innovation, Technology Transfer, and Trade

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  • Jensen, Richard
  • Thursby, Marie

Abstract

The authors analyze a dynamic North-South model of innovation, technology transfer, and trade. Northern firms conduct R&D using labor, which has alternative uses producing in the R&D sector or a nontraded good sector. Since technology trans fer prevents the North from fully appropriating benefits of R&D, the optimal rate of innovation for either profit-maximizing firms or a ut ility-maximizing northern planner is less than globally optimal. An i nceased transfer rate intensifies competition of lower wage southern workers with northern workers in production, so profit-maximizing Nor thern firms reallocate labor toward R&D. Copyright 1987 by The Review of Economic Studies Limited.

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Bibliographic Info

Article provided by Wiley Blackwell in its journal Review of Economic Studies.

Volume (Year): 54 (1987)
Issue (Month): 4 (October)
Pages: 631-47

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Handle: RePEc:bla:restud:v:54:y:1987:i:4:p:631-47

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Cited by:
  1. Lileeva, Alla & Baldwin, John R., 2008. "Adapting to Import Competition: Effects of Low-wage Trade on Commodity Mix in Canadian Manufacturing Plants," Economic Analysis (EA) Research Paper Series 2008054e, Statistics Canada, Analytical Studies Branch.
  2. Pol Antras, 2004. "Incomplete Contracts and the Product Cycle," 2004 Meeting Papers 19, Society for Economic Dynamics.
  3. Kala Krishna & Marie Thursby, 1997. "Whither Flat Panel Displays?," NBER Chapters, in: The Effects of U.S. Trade Protection and Promotion Policies, pages 247-271 National Bureau of Economic Research, Inc.
  4. Michael Fung, 1994. "Technology policies, technology transfer by multinational enterprises and R&D activities in LDCs," Open Economies Review, Springer, vol. 5(3), pages 275-287, July.
  5. Glass, Amy Jocelyn & Saggi, Kamal, 2001. "Innovation and wage effects of international outsourcing," European Economic Review, Elsevier, vol. 45(1), pages 67-86, January.
  6. Lileeva, Alla & Baldwin, John R., 2008. "Adaptation a la concurrence des importations : effets du commerce avec les pays a bas salaires sur le portefeuille de produits des etablissements manufacturiers canadiens," Serie de documents de recherche sur l'analyse economique (AE) 2008054f, Statistics Canada, Direction des etudes analytiques.
  7. Sascha Becker & Peter Egger, 2013. "Endogenous product versus process innovation and a firm’s propensity to export," Empirical Economics, Springer, vol. 44(1), pages 329-354, February.
  8. Grossman, Gene M. & Helpman, Elhanan, 1989. "Product Development and International Trade," Scholarly Articles 3445094, Harvard University Department of Economics.
  9. Zhu, Susan Chun, 2005. "Can product cycles explain skill upgrading?," Journal of International Economics, Elsevier, vol. 66(1), pages 131-155, May.
  10. Salvacruz, Joseph C., 1994. "Technological Change And Agricultural Trade Patterns," Journal of Food Distribution Research, Food Distribution Research Society, vol. 25(1), February.

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