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Trade Liberalisation, Process and Product Innovation, and Relative Skill Demand

  • Sebastian Braun

The interaction between trade liberalisation, product and process innovation, and relative skill demand is analysed in a model of international oligopoly. Lower trading barriers increase the degree of foreign competition. The competing enterprises respond by investing more aggressively in lowering marginal costs of production. Moreover, firms reduce the substitutability of their products through additional investment in product innovation. The paper also shows that the relative demand for skilled workers may increase as a result.

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File URL: http://sfb649.wiwi.hu-berlin.de/papers/pdf/SFB649DP2007-001.pdf
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Paper provided by Sonderforschungsbereich 649, Humboldt University, Berlin, Germany in its series SFB 649 Discussion Papers with number SFB649DP2007-001.

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Length: 19 pages
Date of creation: Jan 2007
Date of revision:
Handle: RePEc:hum:wpaper:sfb649dp2007-001
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  1. Pia Weiss, 2003. "Adoption of Product and Process Innovations in Differentiated Markets: The Impact of Competition," Review of Industrial Organization, Springer, vol. 23(3), pages 301-314, December.
  2. Lin, Ping & Saggi, Kamal, 2002. "Product differentiation, process R&D, and the nature of market competition," European Economic Review, Elsevier, vol. 46(1), pages 201-211, January.
  3. Rosenkranz, Stephanie, 2003. "Simultaneous choice of process and product innovation when consumers have a preference for product variety," Journal of Economic Behavior & Organization, Elsevier, vol. 50(2), pages 183-201, February.
  4. Haaland, Jan I. & Kind, Hans Jarle, 2004. "R&D Policies, Trade and Process Innovation," CEPR Discussion Papers 4784, C.E.P.R. Discussion Papers.
  5. David H. Autor & Lawrence F. Katz & Melissa S. Kearney, 2005. "Trends in U. S. Wage Inequality: Re-Assessing the Revisionists," Harvard Institute of Economic Research Working Papers 2095, Harvard - Institute of Economic Research.
  6. Neary, J Peter, 2002. "Foreign Competition and Wage Inequality," Review of International Economics, Wiley Blackwell, vol. 10(4), pages 680-93, November.
  7. J Peter Neary, 2002. "Globalisation and Market Structure," Working Papers 200220, School of Economics, University College Dublin.
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