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Trade policy mix: IPR protection and R&D subsidies

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  • Moonsung Kang

Abstract

This paper analyses strategic R&D policy under circumstances where intellectual property rights protection resulting from firms' R&D investment is not perfect. By examining policy choices wherein a government chooses both R&D subsidies and IPR protection levels simultaneously, we show that it is optimal for a government to adopt sufficiently weak IPR protection and to subsidize R&D investments of domestic firms. Inducing R&D investment of foreign rival firms will increase the profits of domestic firms. Ce mémoire analyse une politique stratégique de R&D quand la protection des droits de propriété intellectuelle (DPI) qui découlent d'investissements en R&D par les entreprises est imparfaite. En examinant les choix de politiques par lesquels un gouvernement définit simultanément les niveaux de subventions pour la R&D et de protection de la propriété intellectuelle, on montre qu'il est optimal pour un gouvernement d'adopter une protection des DPI suffisamment faible et de subventionner les investissements en R&D des entreprises nationales. Susciter un accroissement des investissements en R&D des entreprises étrangères rivales devrait augmenter les profits des entreprises nationales.

Suggested Citation

  • Moonsung Kang, 2006. "Trade policy mix: IPR protection and R&D subsidies," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 39(3), pages 744-757, August.
    • Handle: RePEc:wly:canjec:v:39:y:2006:i:3:p:744-757
    DOI: 10.1111/j.1540-5982.2006.00367.x
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    References listed on IDEAS

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    Cited by:

    1. Yoon, Jeong & Choi, Kangsik, 2018. "Why do export subsidies still exist? R&D and output subsidies," Japan and the World Economy, Elsevier, vol. 45(C), pages 30-38.
    2. Liao, Pei-Cheng & Wong, Kar-yiu, 2009. "R&D subsidy, intellectual property rights protection, and North-South trade: How good is the TRIPS agreement?," Japan and the World Economy, Elsevier, vol. 21(2), pages 191-201, March.
    3. Moonsung Kang, 2009. "Understanding Agreements on TRIPS and Subsidies in Tandem," Open Economies Review, Springer, vol. 20(2), pages 225-240, April.
    4. Tsuyoshi Toshimitsu, 2014. "Strategic Product R&D Investment Policy under International Rivalry in the Presence of Demand Spillover Effects," International Economic Journal, Taylor & Francis Journals, vol. 28(2), pages 293-309, June.
    5. Jie Li & Xiaohui Xu & Jing Lu, 2015. "Negotiation over Intellectual Property Rights Protection in a Mixed Market," Review of Development Economics, Wiley Blackwell, vol. 19(4), pages 759-775, November.
    6. Moonsung Kang, 2008. "Linkages Between Patent Protection and Strategic R&D Policy: Case of the Exogeneous Regime of IPR Protection," Korean Economic Review, Korean Economic Association, vol. 24, pages 367-382.
    7. Richard Gretz & Jannett Highfill & Robert Scott, 2012. "R&D subsidy games: a cost sharing approach vs. reward for performance," The Journal of Technology Transfer, Springer, vol. 37(4), pages 385-403, August.
    8. Dapeng Cai & Jie Li, 2012. "Quid pro quo and the enforcement of intellectual property rights protection: A bargaining approach," The Journal of International Trade & Economic Development, Taylor & Francis Journals, vol. 21(6), pages 755-772, December.
    9. Shuai Niu, 2011. "Knowledge diffusion vs. technological progress: the optimal strength of IPRs protection," Economics Bulletin, AccessEcon, vol. 31(4), pages 2839-2846.
    10. Naoto Jinji & Tsuyoshi Toshimitsu, 2014. "Strategic Investment Subsidies under Asymmetric Oligopoly," Review of Development Economics, Wiley Blackwell, vol. 18(3), pages 490-501, August.
    11. Jeon, Haejun, 2019. "Patent protection and R&D subsidy under asymmetric information," International Review of Economics & Finance, Elsevier, vol. 62(C), pages 332-354.
    12. Kyoungwon Rhee & Moonsung Kang, 2019. "Export Subsidies and Least Developed Countries: An Entry-Deterrence Model under Complete and Incomplete Information," Korean Economic Review, Korean Economic Association, vol. 35, pages 163-182.

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