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High-Technology Subsidies in General Equilibrium: A Sector-Specific Approach

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  • Karolina Ekholm
  • Johan Torstensson

Abstract

The authors use a specific-factor model to examine the conditions under which policymakers are able to increase aggregate production of high-tech goods by production or R&D subsidies in the short and long run. The difficulties for the policymaker in designing a subsidy scheme that succeeds in expanding aggregate high-tech production involve taking into account the trade-off between resources used in R&D and production of high-tech goods, the relative impact of different R&D activities on productivity, and the ease with which resources may be attracted from the non-high-tech sector of the economy to the various high-tech industries.

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Bibliographic Info

Article provided by Canadian Economics Association in its journal Canadian Journal of Economics.

Volume (Year): 30 (1997)
Issue (Month): 4 (November)
Pages: 1184-1203

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Handle: RePEc:cje:issued:v:30:y:1997:i:4:p:1184-1203

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  1. James A. Brander & Barbara J. Spencer, 1984. "Export Subsidies and International Market Share Rivalry," NBER Working Papers 1464, National Bureau of Economic Research, Inc.
  2. Markusen, James R., 1990. "Derationalizing tariffs with specialized intermediate inputs and differentiated final goods," Journal of International Economics, Elsevier, vol. 28(3-4), pages 375-383, May.
  3. Flam, Harry & Helpman, Elhanan, 1987. "Industrial policy under monopolistic competition," Journal of International Economics, Elsevier, vol. 22(1-2), pages 79-102, February.
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