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Beat 'em or join 'em? : export subsidies versus international research joint ventures in oligopolistic markets

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  • J. Peter Neary
  • Paul O'Sullivan

Abstract

This paper compares adversarial with cooperative industrial and trade policies in a dynamic oligopoly game in which a home and foreign firm compete in R&D and output and, because of spillovers, each firm benefits from the other's R&D. When the government can commit to an export subsidy, such a policy raises welfare relative to cooperation, except when R&D is highly effective and spillovers are near-complete. Without commitment, however, subsidisation may yield welfare levels much lower than cooperation and lower even than free trade, though qualifications to the dangers from no commitment are noted.

Suggested Citation

  • J. Peter Neary & Paul O'Sullivan, 1998. "Beat 'em or join 'em? : export subsidies versus international research joint ventures in oligopolistic markets," Working Papers 199810, School of Economics, University College Dublin.
    • Handle: RePEc:ucn:wpaper:199810
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    File URL: http://hdl.handle.net/10197/3045
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    Cited by:

    1. Neary, J Peter & Leahy, Dermot, 2000. "Strategic Trade and Industrial Policy towards Dynamic Oligopolies," Economic Journal, Royal Economic Society, vol. 110(463), pages 484-508, April.
    2. Dewit, Gerda & Leahy, Dermot, 2004. "Rivalry in uncertain export markets: commitment versus flexibility," Journal of International Economics, Elsevier, vol. 64(1), pages 195-209, October.
    3. Jo, Seung-gyu & den Butter, Frank A. G., 2009. "Pros and Cons of Backing Winners in Innovation Policy," MPRA Paper 17658, University Library of Munich, Germany.
    4. Alireza Naghavi & Dermot Leahy, 2006. "Intellectual Property Rights and Entry into a Foreign Market: FDI vs. Joint Ventures," Working Papers 2006.97, Fondazione Eni Enrico Mattei.
    5. Alireza Naghavi & Dermot Leahy, 2008. "Intellectual Property Rights and North-South Joint Ventures," Center for Economic Research (RECent) 017, University of Modena and Reggio E., Dept. of Economics "Marco Biagi".
    6. Haaland, Jan I. & Kind, Hans Jarle, 2008. "R&D policies, trade and process innovation," Journal of International Economics, Elsevier, vol. 74(1), pages 170-187, January.
    7. Aikaterini KOKKINOU, 2010. "Economic growth, innovation and collaborative research and development activities," Management & Marketing, Economic Publishing House, vol. 5(1), Spring.
    8. Julie DeCourcy, 2005. "Cooperative R&D and strategic trade policy," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 38(2), pages 546-573, May.
    9. Julie DeCourcy, 2007. "Research Joint Ventures And International Competitiveness: Evidence From The National Cooperative Research Act," Economics of Innovation and New Technology, Taylor & Francis Journals, vol. 16(1), pages 51-65.
    10. Alireza Naghavi, 2003. "Strategic Intellectual Property Protection Policy and North-South Technology Transfer," Working Papers 200313, School of Economics, University College Dublin.

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    More about this item

    Keywords

    Research and development; R&D spillovers; Cooperative agreements; Research Joint Ventures; Strategic trade policy; Export subsidies; Commitment; Dynamic consistency; Research; Industrial--Mathematical models; Commercial policy--Mathematical models; Export subsidies--Mathematical models;
    All these keywords.

    JEL classification:

    • F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations

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