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High-Technology Subsidies in General Equilibrium: A Sector-Specific Approach

  • Ekholm, Karolina

    (Research Institute of Industrial Economics (IFN))

  • Torstensson, Johan

    (Lund University)

We use a specific-factor model to examine the conditions under which policy-makers are able to increase aggregate production of high-tech goods by production or R&D-subsidies in the short and long run. The difficulties for the policy-makers in designing a subsidy scheme that succeeds in expanding aggregate high-tech production involve taking into account the trade-off between resources used in R&D and production of high-tech goods, the relative impact of different R&D activities on productivity, and the ease with which resources may be attracted from the non-high-tech sector of the economy to the various high-tech industries.

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Paper provided by Research Institute of Industrial Economics in its series Working Paper Series with number 467.

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Length: 27 pages
Date of creation: Sep 1996
Date of revision:
Handle: RePEc:hhs:iuiwop:0467
Contact details of provider: Postal: Research Institute of Industrial Economics, Box 55665, SE-102 15 Stockholm, Sweden
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Fax: +46 8 665 4599
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  1. James A. Brander & Barbara J. Spencer, 1984. "Export Subsidies and International Market Share Rivalry," NBER Working Papers 1464, National Bureau of Economic Research, Inc.
  2. Flam, Harry & Helpman, Elhanan, 1987. "Industrial policy under monopolistic competition," Journal of International Economics, Elsevier, vol. 22(1-2), pages 79-102, February.
  3. Markusen, James R., 1990. "Derationalizing tariffs with specialized intermediate inputs and differentiated final goods," Journal of International Economics, Elsevier, vol. 28(3-4), pages 375-383, May.
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