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Welfare Measures in Dynamic Firm R&D Games

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  • Jannett Highfill
  • Michael McAsey

Abstract

The present paper examines the welfare effects of a dynamic Research and Development (R&D) game at the firm level in a two-country, two-firm, intra-industry trade context. Economists do not use the trade balance as a measure of economic welfare, but it is often used in the public arena. The primary result of the paper is that the dynamic time path of social surplus and the trade balance do not track well together. This paper suggests that economists thinking about dynamic R&D games will have to defend imports as having a positive effect on social surplus regardless of trade balance effects. Copyright International Atlantic Economic Society 2013

Suggested Citation

  • Jannett Highfill & Michael McAsey, 2013. "Welfare Measures in Dynamic Firm R&D Games," International Advances in Economic Research, Springer;International Atlantic Economic Society, vol. 19(4), pages 439-449, November.
    • Handle: RePEc:kap:iaecre:v:19:y:2013:i:4:p:439-449:10.1007/s11294-013-9425-0
    DOI: 10.1007/s11294-013-9425-0
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    References listed on IDEAS

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    1. Jannett Highfill & Michael McAsey, 2010. "Firm Metrics with Continuous R&D, Quality Improvement, and Cournot Quantities," International Advances in Economic Research, Springer;International Atlantic Economic Society, vol. 16(3), pages 243-256, August.
    2. 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.
    3. Jan Haaland & Hans Jarle Kind, 2006. "Cooperative and Non-Cooperative R&D Policy in an Economic Union," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 142(4), pages 720-745, December.
    4. Jannett Highfill & Michael McAsey, 2010. "Dynamic Product Reliability Management for a Firm with a Complacent Competitor vs. a Lockstep Competitor," Journal of Economic Insight, Missouri Valley Economic Association, vol. 36(1), pages 29-54.
    5. Sanna-Randaccio, Francesca, 2002. "The Impact of Foreign Direct Investment on Home and Host Countries with Endogenous R&D," Review of International Economics, Wiley Blackwell, vol. 10(2), pages 278-298, May.
    6. Cellini, Roberto & Lambertini, Luca, 2009. "Dynamic R&D with spillovers: Competition vs cooperation," Journal of Economic Dynamics and Control, Elsevier, vol. 33(3), pages 568-582, March.
    7. Femminis, Gianluca & Martini, Gianmaria, 2011. "Irreversible investment and R&D spillovers in a dynamic duopoly," Journal of Economic Dynamics and Control, Elsevier, vol. 35(7), pages 1061-1090, July.
    8. Petit, Maria Luisa & Tolwinski, Boleslaw, 1999. "R&D cooperation or competition?," European Economic Review, Elsevier, vol. 43(1), pages 185-208, January.
    9. Jannett Highfill & Michael McAsey, 2013. "Dynamic Firm R&D Games: Manufacturing Costs and Reliability Paths," Review of Economics & Finance, Better Advances Press, Canada, vol. 3, pages 1-14, February.
    10. Boris Lokshin & René Belderbos & Martin Carree, 2008. "The Productivity Effects of Internal and External R&D: Evidence from a Dynamic Panel Data Model," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 70(3), pages 399-413, June.
    11. Richard T. Gretz & Jannett Highfill & Robert C. Scott, 2009. "Strategic Research And Development Policy: Societal Objectives And The Corporate Welfare Argument," Contemporary Economic Policy, Western Economic Association International, vol. 27(1), pages 28-45, January.
    12. Richard Gretz & Jannett Highfill & Robert Scott, 2012. "R&D subsidy games: a cost sharing approach vs. reward for performance," The Journal of Technology Transfer, Springer, vol. 37(4), pages 385-403, August.
    13. Maria Luisa Petit & Francesca Sanna-Randaccio & Roberta Sestini, 2012. "R&D and foreign direct investment with asymmetric spillovers," Economics of Innovation and New Technology, Taylor & Francis Journals, vol. 21(2), pages 125-150, October.
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    More about this item

    Keywords

    Differential games; Innovation competition; Product reliability; D92; O31; F12;
    All these keywords.

    JEL classification:

    • D92 - Microeconomics - - Micro-Based Behavioral Economics - - - Intertemporal Firm Choice, Investment, Capacity, and Financing
    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
    • F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation

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