Cuihong Fan (Shanghai University of Finance and Economics, School of Economics, Guoding Road 777 200433 Shanghai, China. cuihong@gmx.net) Elmar Wolfstetter (Dept. of Economics, Institute of Economic Theory I, Humboldt University at Berlin, Spandauer Str. 1, 10099 Berlin,Germany. elmar.wolfstetter@rz.hu-berlin.de)
Additional information is available for the following
registered author(s):
We reconsider the justifications of R&D subsidies by Spencer and Brander (1983) and others by allowing firms to pool R&D investments and license innovations. In equilibrium R&D joint ventures are formed and licensing occurs in a way that eliminates the strategic benefits of R&D investment in the subsequent oligopoly game. Nevertheless, governments subsidize their domestic firms in order to raise their bargaining position in the joint venture. This holds true regardless of whether governments offer either unconditional or conditional subsidies. This suggests an alternative explanation of the observed proliferation of R&D subsidies.
Download Info
To download:
If you experience problems downloading a file, check if you have the
proper application to
view it first. Information about this may be contained
in the File-Format links below. In case of further problems read
the IDEAS help
page. Note that these files are not on the IDEAS
site. Please be patient as the files may be large.
Publisher Info
Paper provided by SFB/TR 15 Governance and the Efficiency of Economic Systems, Free University of Berlin, Humboldt University of Berlin, University of Bonn, University of Mannheim, University of Munich in its series Discussion Papers with number
165.