R&D Spillovers and the Case for Industrial Policy in an Open Economy
AbstractIn this paper, the authors consider the case for subsidies toward firms which generate R&D spillovers in open economies. They show that, in the presence of strategic behavior by firms, many expected results are overturned. Local R&D spillovers to other domestic firms may justify an R&D tax rather than a subsidy; R&D cooperation by local firms overinternalizes the externality and also justifies an R&D tax; and international spillovers that benefit foreign firms may justify a subsidy, even though the government cares only about the profits of home firms. Copyright 1999 by Royal Economic Society.
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Bibliographic InfoArticle provided by Oxford University Press in its journal Oxford Economic Papers.
Volume (Year): 51 (1999)
Issue (Month): 1 (January)
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Other versions of this item:
- D. Leahy & J. P. Neary, 1997. "R&D spillovers and the case for industrial policy in an open economy," LSE Research Online Documents on Economics 20342, London School of Economics and Political Science, LSE Library.
- D Leahy & J.P. Neary, 1997. "R&D Spillovers and the Case for Industrial Policy in an Open Economy," CEP Discussion Papers dp0345, Centre for Economic Performance, LSE.
- Leahy, Dermot & Neary, J Peter, 1997. "R&D Spillovers and the Case for Industrial Policy in an Open Economy," CEPR Discussion Papers 1671, C.E.P.R. Discussion Papers.
- F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
- L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
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