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Globally Optimal R&D Subsidy Policy: an Economist’s View on the WTO Subsidy Agreement

Listed author(s):
  • Kang, Moonsung


    (Korea University)

Registered author(s):

    We provide economic backgrounds to the Agreement on Subsidies and Countervailing Measures under the World Trade Organization. Permitting R&D subsidy under Article 8 of the Agreement can be interpreted as an inefficient victory of an individual exporting country in the non-cooperative game, harnessing strategic relationship over a foreign rival firm into its domestic industrial policy. In addition, we show that the expiration of Article 8 can be understood as a result of the global optimum, where we maximize the sum of welfares over exporting and importing countries in the symmetric case with a linear demand.

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    Article provided by Center for Economic Integration, Sejong University in its journal Journal of Economic Integration.

    Volume (Year): 23 (2008)
    Issue (Month): ()
    Pages: 346-359

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    Handle: RePEc:ris:integr:0437
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