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International Tariffs in a Mixed Oligopoly with Research Spillovers

Author

Listed:
  • Haruna Shoji

    (Department of Economics, Fukuyama University, Fukuyama, Hiroshima Prefecture, 729-0292, Japan)

  • Goel Rajeev K.

    () (Department of Economics, Illinois State University, Normal, IL 61790-4200, USA, Phone: +1-309-438-2360, Fax: +1-309-438-5228)

Abstract

This paper merges three strands of the literature – industrial organization, international trade, and economics of technical change – to examine the effect of tariffs on international mixed oligopolies which conduct research and development (R&D) that is prone to spillovers. Mixed oligopolies are prevalent in the defense sector, among other sectors. Using a two-stage sequential game with R&D in the first stage and production in the second stage, results show that higher tariffs reduce outputs of both the domestic public firm and foreign private firms, and private R&D. Effects on domestic R&D and welfare, and profits of foreign private firms depend upon spillovers. Within a large range of research spillovers, higher tariffs can in fact lower welfare. Some of these findings are different from traditional oligopolies and from models that ignore research spillovers. Policy implications are discussed.

Suggested Citation

  • Haruna Shoji & Goel Rajeev K., 2016. "International Tariffs in a Mixed Oligopoly with Research Spillovers," Peace Economics, Peace Science, and Public Policy, De Gruyter, vol. 22(3), pages 277-293, August.
  • Handle: RePEc:bpj:pepspp:v:22:y:2016:i:3:p:277-293:n:1
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    References listed on IDEAS

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    More about this item

    Keywords

    mixed oligopoly; R&D; spillovers; cost reduction; import tariffs; defense sector;

    JEL classification:

    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
    • L22 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Organization and Market Structure
    • F19 - International Economics - - Trade - - - Other

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