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
Permanent link: http://hdl.handle.net/10197/1780
Date: Aug-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 when government commitment is credible than in the dynamically consistent equilibrium without commitment. Commitment thus yields welfare gains (though they are small) 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 & Development;R&D subsidies;Strategic trade policy;Export subsidies;Commitment;Dynamic consistency
Subject LCSH: Research, Industrial
Industrial policy
Commercial policy
Oligopolies
Language: en
Status of Item: Not peer reviewed
Appears in Collections:Economics Working Papers & Policy Papers

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