International R&D rivalry and industrial strategy without government commitment

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Title: International R&D rivalry and industrial strategy without government commitment
Authors: Leahy, Dermot
Neary, J. Peter
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Date: 9-May-1995
Abstract: We examine optimal industrial and trade policies in a series of dynamic oligopoly games in which a home and a foreign firm compete in R&D and output. Alternative assumptions about the timing of moves and the ability of agents to commit intertemporally are considered. We show that the home export subsidy, R&D subsidy and welfare are higher in an equilibrium in which government commitment is credible than in the dynamically consistent equilibrium without commitment. Commitment yields gains but so does unanticipated reneging, whereas reneging which is anticipated by firms yields the lowest welfare of all.
Type of material: Working Paper
Publisher: University College Dublin. School of Economics
Keywords: Research & DevelopmentR&D subsidiesStrategic trade policyExport subsidiesCommitmentDynamic consistency
Subject LCSH: Research, Industrial
Industrial policy
Commercial policy
Export subsidies
Language: en
Status of Item: Not peer reviewed
Appears in Collections:Economics Working Papers & Policy Papers

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