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Tariffs and Technology Transfer through an Intermediate Product

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  • Eiji Horiuchi
  • Jota Ishikawa

Abstract

We examine the relationship between tariffs and North-South technology transfer in an oligopoly model when technology is embodied in a key component that only North firms can produce. They may have an incentive to transfer their technologies to South firms even if the South's licensing market is restricted or if intellectual property right protection is imperfect in the South. Interestingly, a decrease in the tariff on the final good as well as an increase may induce technology transfer. Our analysis suggests that the South should implement pro-competitive policies to induce technology transfer and enhance welfare. Copyright 2009 The Authors. Journal compilation 2009 Blackwell Publishing Ltd.

Suggested Citation

  • Eiji Horiuchi & Jota Ishikawa, 2009. "Tariffs and Technology Transfer through an Intermediate Product," Review of International Economics, Wiley Blackwell, vol. 17(SI), pages 310-326, May.
  • Handle: RePEc:bla:reviec:v:17:y:2009:i:si:p:310-326
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    References listed on IDEAS

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    1. James R. Markusen, 2004. "Multinational Firms and the Theory of International Trade," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262633078, January.
    2. Katharine E. Rockett, 1990. "Choosing the Competition and Patent Licensing," RAND Journal of Economics, The RAND Corporation, pages 161-171.
    3. Wang, X. Henry, 1998. "Fee versus royalty licensing in a Cournot duopoly model," Economics Letters, Elsevier, vol. 60(1), pages 55-62, July.
    4. Kamien, Morton I & Tauman, Yair, 2002. "Patent Licensing: The Inside Story," Manchester School, University of Manchester, vol. 70(1), pages 7-15, January.
    5. Ping Lin & Kamal Saggi, 1999. "Incentives for Foreign Direct Investment under Imitation," Canadian Journal of Economics, Canadian Economics Association, vol. 32(5), pages 1275-1298, November.
    6. Ishikawa, Jota & Spencer, Barbara J., 1999. "Rent-shifting export subsidies with an imported intermediate product," Journal of International Economics, Elsevier, pages 199-232.
    7. Mukherjee, Arijit & Pennings, Enrico, 2006. "Tariffs, licensing and market structure," European Economic Review, Elsevier, vol. 50(7), pages 1699-1707, October.
    8. Ishikawa, Jota & Spencer, Barbara J., 1999. "Rent-shifting export subsidies with an imported intermediate product," Journal of International Economics, Elsevier, pages 199-232.
    9. Pack, Howard & Saggi, Kamal, 2001. "Vertical technology transfer via international outsourcing," Journal of Development Economics, Elsevier, pages 389-415.
    10. Mukesh Eswaran, 1994. "Licensees as Entry Barriers," Canadian Journal of Economics, Canadian Economics Association, vol. 27(3), pages 673-688, August.
    11. Kabiraj, Tarun & Marjit, Sugata, 2003. "Protecting consumers through protection: The role of tariff-induced technology transfer," European Economic Review, Elsevier, vol. 47(1), pages 113-124, February.
    12. Davies, Howard, 1977. "Technology Transfer through Commercial Transactions," Journal of Industrial Economics, Wiley Blackwell, vol. 26(2), pages 161-175, December.
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    Citations

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    Cited by:

    1. Ishikawa, Jota & Okubo, Toshihiro, 2010. "Environmental Standards under International Oligopoly," CCES Discussion Paper Series 32, Center for Research on Contemporary Economic Systems, Graduate School of Economics, Hitotsubashi University.
    2. ISHIKAWA Jota & OKUBO Toshihiro, 2010. "Environmental Standards under International Oligopoly," Discussion papers 10018, Research Institute of Economy, Trade and Industry (RIETI).
    3. Tomomichi Mizuno & Kazuhiro Takauchi & Takeshi Iida, 2011. "Better technology may be sold for a lower fee: The ad valorem tariff and licensing contract," Discussion Papers 1109, Graduate School of Economics, Kobe University.
    4. Takao Asano & Noriaki Matsushima, 2012. "Environmental regulation and technology transfers," ISER Discussion Paper 0862, Institute of Social and Economic Research, Osaka University.
    5. Ya-Po Yang & Jin-Li Hu, 2012. "Gresham’s law in environmental protection," Environmental Economics and Policy Studies, Springer;Society for Environmental Economics and Policy Studies - SEEPS, vol. 14(2), pages 103-122, April.
    6. Aoki, Reiko & Kao, Tina, 2012. "Protection of basic research and R&D incentives in an international setting," CIS Discussion paper series 563, Center for Intergenerational Studies, Institute of Economic Research, Hitotsubashi University.
    7. Takao Asano & Noriaki Matsushima, 2014. "Environmental regulation and technology transfers," Canadian Journal of Economics, Canadian Economics Association, vol. 47(3), pages 889-904, August.
    8. Jota Ishikawa & Eiji Horiuchi, 2012. "Strategic Foreign Direct Investment in Vertically Related Markets," The Economic Record, The Economic Society of Australia, vol. 88(281), pages 229-242, June.
    9. Imai, Susumu & Katayama, Hajime & Krishna, Kala, 2013. "A quantile-based test of protection for sale model," Journal of International Economics, Elsevier, vol. 91(1), pages 40-52.

    More about this item

    JEL classification:

    • F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business

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