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Entry Liberalization, Export Subsidy and R&D

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  • Roy Chowdhury, Prabal

Abstract

We examine, in the context of less developed countries, the R&D behaviour of igopolistic firms who compete over R&D, as well as output levels. We also assume that the firms can sell in either of the two markets - the domestic, or the foreign. We show that entry liberalization, despite increasing the level of competitiveness, does not affect the level of R&D. An increase in export subsidy may, however, lead to an increase in domestic R&D. Both these results contradict the popular argument that the levels of domestic R&D is positively related to the level of domestic competitiveness. We also demonstrate that any foreign firm that may enter selects a level of R&D that is atleast as efficient as that selected by any domestic firm. Finally, we demonstrate that entry liberalization has a positive effect on exports, as well as aggregate output.

Suggested Citation

  • Roy Chowdhury, Prabal, 2006. "Entry Liberalization, Export Subsidy and R&D," MPRA Paper 1532, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:1532
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    References listed on IDEAS

    as
    1. R. J. Ruffin, 1971. "Cournot Oligopoly and Competitive Behaviour," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 38(4), pages 493-502.
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    More about this item

    Keywords

    Entry liberalization; export subsidy; R&D; competitiveness;
    All these keywords.

    JEL classification:

    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • O32 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Management of Technological Innovation and R&D

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