Patent Infringement and Strategic Trade Policies : R&D and Export Subsidies
Like the original Spencer-Brander result, the R&D incentives that we identify lead governments to set positive R&D subsides in the non-cooperative equilibrium. However, we find that if exporting governments could cooperate over their policy choices they would continue to subsidize R&D, rather than agreeing to tax R&D as in the original Spencer-Brander set-up. The reason is that under cooperation they will also agree to share perfectly the results of R&D investments (i.e., eliminate IPR protection), and R&D subsides are then required to maintain appropriate incentives for firms to engage in R&D investments. This last result is interesting for two reasons, both of which point to the importance of examining R&D subsides and IPR policies in tandem as we have done rather than in isolation as has heretofore typically been done. First, by this result we show that the case for strategic R&D subsides is more robust than previously thought, as it applies whether exporting governments are acting cooperatively or non-cooperatively, once their equilibrium choices of IPR protection are taken into account as well. And second, by this result we identify a puzzle as to why governments might wish to agree to jointly eliminate, rather than tighten, their levels of IPR protection, given that hey have at their disposal R&D outcomes. We show that the flavour of these findings extend as well to the case in which governments also have export policies at their disposal. In the original Spencer-Brander set-up, the addition of export policies leads governments to tax R&D and offer export subsides, pointing to another way in which the case for strategic R&D subsides appears to be fragile. But again out results imply that this fragility disappears in a setting in which the choice of IPR protection is modelled well.
|Date of creation:||Nov 2000|
|Date of revision:|
|Contact details of provider:|| Postal: JG Crawford Building #13, Asia Pacific School of Economics and Government, Australian National University, ACT 0200|
Web page: http://www.eaber.org
More information through EDIRC
When requesting a correction, please mention this item's handle: RePEc:eab:tradew:21759. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Shiro Armstrong)
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.