Munich Personal RePEc Archive

International R&D tournaments and Industrial Policy

Zhou, Haiwen (2007): International R&D tournaments and Industrial Policy. Published in: Journal of Economic Integration , Vol. 22, (2007): pp. 320-338.

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Abstract

This paper provides a unified approach to study the influence of uncertainty and spillovers on the direction of R&D policy when firms engage in international R&D competition. When the reward to the winner is exogenously given, it is shown that whether a government will tax or subsidize its firm is sensitive to the type of uncertainty that characterizes the R&D process. When the reward to the winner is endogenously determined by R&D spending, the direction of optimal policy is not only sensitive to the type of uncertainty, but also sensitive to the degree of spillovers.

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