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

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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.

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en

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application/pdf

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http://eprints.lse.ac.uk/20247/1/Beat_%27Em_or_Join_%27Em_Export_Subsidies_versus_International_Research_Joint_Ventures_in_Oligopolistic_Markets.pdf

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