R&D Spillovers and the Case for Industrial Policy in an Open Economy
AbstractIn this paper we consider the case for subsidies towards firms which generate R&D spillovers in open economies. We show that many expected results are overturned in the presence of strategic behaviour by firms. Local R&D spillovers to other domestic firms may justify an R&D tax rather than a subsidy; R&D cooperation by local firms over-internalises the externality and also justifies an R&D tax; and international spillovers which benefit foreign firms may justify a subsidy, even though the government cares only about the profits of home firms.
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Bibliographic InfoPaper provided by Centre for Economic Performance, LSE in its series CEP Discussion Papers with number dp0345.
Date of creation: Apr 1997
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Web page: http://cep.lse.ac.uk/_new/publications/series.asp?prog=CEP
Other versions of this item:
- Leahy, Dermot & Neary, J Peter, 1999. "R&D Spillovers and the Case for Industrial Policy in an Open Economy," Oxford Economic Papers, Oxford University Press, vol. 51(1), pages 40-59, January.
- Leahy, Dermot & Neary, J Peter, 1997. "R&D Spillovers and the Case for Industrial Policy in an Open Economy," CEPR Discussion Papers, C.E.P.R. Discussion Papers 1671, C.E.P.R. Discussion Papers.
- 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, London School of Economics and Political Science, LSE Library 20342, London School of Economics and Political Science, LSE Library.
- R14 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Land Use Patterns
- J01 - Labor and Demographic Economics - - General - - - Labor Economics: General
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