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Beat 'em or Join 'em? Export Subsidies versus International Research Joint Ventures in Oligopolistic Markets

Author

Listed:
  • J. Peter Neary
  • Paul O'Sullivan

Abstract

We compare adversarial with cooperative industrial and trade policies in a dynamic oligopoly game in which a home and foreign firm compete in R&D and output and, because of spillovers, each firm benefits from the other's R&D. When the government can commit to an export subsidy, such a policy raises welfare relative to cooperation, except when R&D is highly effective and spillovers are near‐complete. Without commitment, however, subsidisation may yield welfare levels much lower than cooperation and lower even than free trade, though qualifications to the dangers from no commitment are noted. JEL classification: F12; F13

Suggested Citation

  • J. Peter Neary & Paul O'Sullivan, 1999. "Beat 'em or Join 'em? Export Subsidies versus International Research Joint Ventures in Oligopolistic Markets," Scandinavian Journal of Economics, Wiley Blackwell, vol. 101(4), pages 577-596, December.
    • Handle: RePEc:bla:scandj:v:101:y:1999:i:4:p:577-596
    DOI: 10.1111/1467-9442.00174
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    Cited by:

    1. 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.
    2. Alireza Naghavi, 2003. "Strategic intellectual property protection policy and North-South technology transfer," Working Papers 200313, School of Economics, University College Dublin.
    3. Dewit, Gerda & Leahy, Dermot, 2004. "Rivalry in uncertain export markets: commitment versus flexibility," Journal of International Economics, Elsevier, vol. 64(1), pages 195-209, October.
    4. Julie DeCourcy, 2007. "Research Joint Ventures And International Competitiveness: Evidence From The National Cooperative Research Act," Economics of Innovation and New Technology, Taylor & Francis Journals, vol. 16(1), pages 51-65.
    5. Frank A.G. den Butter & Seung-gyu Jo, 2009. "Pros and Cons of ‘Backing Winners’ in Innovation Policy," Tinbergen Institute Discussion Papers 09-012/3, Tinbergen Institute.
    6. Leahy, Dermot & Naghavi, Alireza, 2006. "Intellectual Property Rights and Entry into a Foreign Market: FDI vs Joint Ventures," CEPR Discussion Papers 5672, C.E.P.R. Discussion Papers.
    7. Aikaterini KOKKINOU, 2010. "Economic growth, innovation and collaborative research and development activities," Management & Marketing, Economic Publishing House, vol. 5(1), Spring.
    8. 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.
    9. Alireza Naghavi & Dermot Leahy, 2008. "Intellectual Property Rights and North-South Joint Ventures," Center for Economic Research (RECent) 017, University of Modena and Reggio E., Dept. of Economics "Marco Biagi".
    10. Julie DeCourcy, 2005. "Cooperative R&D and strategic trade policy," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 38(2), pages 546-573, May.

    More about this item

    JEL classification:

    • F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations

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