Article ID | Journal | Published Year | Pages | File Type |
---|---|---|---|---|
997906 | International Economics | 2015 | 18 Pages |
Abstract
We analyze the incentives to subsidize R&D when there is an R&D leader and an R&D follower. Without government intervention, the R&D leader always achieves higher cost competitiveness than the R&D follower. In the presence of R&D subsidies, the country that hosts the R&D follower offers higher R&D subsidies than the country that hosts the R&D leader. As a result, competitiveness-shifting effects arise, since due to the R&D subsidy the R&D follower achieves higher cost competitiveness than the R&D leader. Consequently, the country that hosts the R&D follower does not face a prisoner׳s dilemma in international subsidy wars, since even when the foreign country retaliates, it is always better off when it intervenes.
Related Topics
Social Sciences and Humanities
Economics, Econometrics and Finance
Economics, Econometrics and Finance (General)
Authors
Armando J. Garcia Pires,