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


  • Kang, Moonsung

    () (Korea University)


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.

Suggested Citation

  • Kang, Moonsung, 2008. "Globally Optimal R&D Subsidy Policy: an Economist’s View on the WTO Subsidy Agreement," Journal of Economic Integration, Center for Economic Integration, Sejong University, vol. 23, pages 346-359.
  • Handle: RePEc:ris:integr:0437

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    References listed on IDEAS

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    More about this item


    Strategic Trade Policy; R&D subsidies; WTO;

    JEL classification:

    • F10 - International Economics - - Trade - - - General
    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations


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