Whither Flat Panel Displays?
AbstractThis paper examines possible consequences of subsidies to R&D and to volume production proposed under the Clinton administration's flat panel display initiative. We do this in the context of a model in which firms behave competitively in the short run, while realizing that their choices of capacity and yield-improving R&D in the medium and long run will affect market price. Policy simulations show that steady state yields and profits are lower, while prices are higher with subsidies for capacity acquisition than with R&D subsidies. This occurs because a firm's incentives to do R&D are diminished by a subsidy on capacity costs.
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Bibliographic InfoPaper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 5415.
Date of creation: Jan 1996
Date of revision:
Publication status: published as The Effects of US Trade Protection and Promotion Policies, R. Feenstra, ed.pp. 247-271, (Chicago: University of Chicago Press, 1997).
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Postal: National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.
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Other versions of this item:
- Krishna, K. & Thursbay, M., 1996. "Whither Flat Panel Display?," Papers 1-96-1, Pennsylvania State - Department of Economics.
- Krishna, K & Thursby, M, 1995. "Whither Flat Panel Displays?," Papers 95-007, Purdue University, Krannert School of Management - Center for International Business Education and Research (CIBER).
- F1 - International Economics - - Trade
- L5 - Industrial Organization - - Regulation and Industrial Policy
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- Richard E. Baldwin & Paul Krugman, 1986. "Market Access and International Competition: A Simulation Study of 16K Random Access Memories," NBER Working Papers 1936, National Bureau of Economic Research, Inc.
- Jensen, Richard & Thursby, Marie, 1987. "A Decision Theoretic Model of Innovation, Technology Transfer, and Trade," Review of Economic Studies, Wiley Blackwell, vol. 54(4), pages 631-47, October.
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