R&D Policy Competition with Process Innovation in a Multi-Product Duopoly
This paper considers a reciprocal dumping model which consists of two countries, each owning a multi-product firm which sells products to both countries. The firms choose the R&D investment portfolio for their products, and a government may subsidize or tax its domestic firm for the R&D investment. It is shown that a firm invests more in R&D for its core (non-core) product if products are sufficiently differentiated (similar) to each other. Moreover, if a firm invests more in its non-core product than its core product, it does that to an extent such that the non-core product becomes the core product after the R&D process. Policy competition results in a unilateral incentive of a subsidy, and the stable optimal policy is always a subsidy. When two governments harmonize their policies, it is optimal for them to set subsidies to zero. The optimal subsidy in a duopoly is higher than that in a monopoly if and only if two governments' policies are strategic substitutes.
Volume (Year): 3 (2013)
Issue (Month): (November)
|Contact details of provider:|| Postal: |
Web page: http://www.bapress.ca
|Order Information:|| Postal: 17 Alton Towers Circle, Unit 101 Toronto, ON, M1V3L8, Canada|
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- D Leahy & J.P. Neary, 1998.
"Strategic Trade and Industrial PolicyTowards Dynamic Oligopolies,"
CEP Discussion Papers
dp0409, Centre for Economic Performance, LSE.
- Neary, J Peter & Leahy, Dermot, 2000. "Strategic Trade and Industrial Policy towards Dynamic Oligopolies," Economic Journal, Royal Economic Society, vol. 110(463), pages 484-508, April.
- Leahy, Dermot & Neary, J Peter, 1998. "Strategic Trade and Industrial Policy Towards Dynamic Oligopolies," CEPR Discussion Papers 1968, C.E.P.R. Discussion Papers.
- J. Peter Neary & Dermot Leahy, 1998. "Strategic trade and industrial policy towards dynamic oligopolies," LSE Research Online Documents on Economics 20246, London School of Economics and Political Science, LSE Library.
- Neary, J.P. & Leahy, D., 1998. "Strategic Trade and Industrial Policy Towards Dynamic Oligopolies," Papers 98/14, College Dublin, Department of Political Economy-.
- Dermot Leahy & J. Neary, 2009.
"Multilateral subsidy games,"
Springer, vol. 41(1), pages 41-66, October.
- Bagwell, Kyle & Staiger, Robert W., 1994.
"The sensitivity of strategic and corrective R&D policy in oligopolistic industries,"
Journal of International Economics,
Elsevier, vol. 36(1-2), pages 133-150, February.
- Kyle Bagwell & Robert W. Staiger, 1989. "The Sensitivity of Strategic and Corrective R&D Policy in Oligopolistic Industries," Discussion Papers 869, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
- Robert W. Staiger & Kyle Bagwell, 1990. "The Sensitivity of Strategic and Corrective R&D Policy in Oligopolistic Industries," NBER Working Papers 3236, National Bureau of Economic Research, Inc.
- Barbara J. Spencer & James A. Brander, 1982.
"International R&D Rivalry and Industrial Strategy,"
518, Queen's University, Department of Economics.
- Spencer, Barbara J & Brander, James A, 1983. "International R & D Rivalry and Industrial Strategy," Review of Economic Studies, Wiley Blackwell, vol. 50(4), pages 707-22, October.
- Haaland, Jan I. & Kind, Hans Jarle, 2008.
"R&D policies, trade and process innovation,"
Journal of International Economics,
Elsevier, vol. 74(1), pages 170-187, January.
- Leahy, Dermot & Neary, J Peter, 2001.
"Robust Rules for Industrial Policy in Open Economies,"
CEPR Discussion Papers
2731, C.E.P.R. Discussion Papers.
- Dermot Leahy & J. Peter Neary, 2000. "Robust Rules for Industrial Policy in open Economies," Working Papers 200021, School of Economics, University College Dublin.
When requesting a correction, please mention this item's handle: RePEc:bap:journl:130404. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Bill)
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.