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.

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.

• Item Type: MPRA Paper
• Language: English
• Keywords: International R&D tournaments, Industrial policy, uncertainty, spillovers
• Subjects: F - International Economics > F1 - Trade > F12 - Models of Trade with Imperfect Competition and Scale Economies ; Fragmentation; F - International Economics > F1 - Trade > F13 - Trade Policy ; International Trade Organizations

References

Bagwell, Kyle, and Robert Staiger. 1992. The Sensitivity of Strategic and Corrective R&D Policy in Battles for Monopoly. International Economic Review 33, 795-816.

Bagwell, Kyle, and Robert Staiger. 1994. The Sensitivity of Strategic and Corrective R&D Policy in Oligopolistic Industries. Journal of International Economics 36, 133-150.

Brander, James. 1995. Strategic Trade Theory, in G. Grossman and K. Rogoff, eds., Handbook of International Economics, Volume 3, Amsterdam: North-Holland.

Bulow, Jeremy, John Geanakoplos, and Paul Klemperer. 1985. Multimarket Oligopoly: Strategic Substitutes and Complements. Journal of Political Economy 93, 488-511.

Coe, David, and Elhanan Helpman. 1995. International R&D Spillovers. European Economic Review 39, 859-887.

d'Aspremont, Claude, and Alexis Jacquemin. 1988. Cooperative and Noncooperative R&D in Duopoly with Spillovers. American Economic Review 78, 1133-1137.

DeCourcy, Julie. 2005. Cooperative R&D and Strategic Trade Policy. Canadian Journal of Economics 38, 546-573.

Fudenberg, Drew, and Jean Tirole. 1984. The Fat-cat Effect, the Puppy-dog Ploy, and the Lean and Hungry Look. American Economic Review Papers and Proceedings 74, 361-366.

Keller, Wolfgang. 2004. International Technology Diffusion. Journal of Economic Literature 42, 752-782.

Konrad, Kai. 2000. Trade Contests. Journal of International Economics 51, 317-334.

Lazear, Edward, and Sherwin Rosen. 1981. Rank-order Tournaments as Optimum Labor Contracts. Journal of Political Economy 89, 841-864.

Leahy, Dermot, and Peter J. Neary. 1999. R&D Spillovers and the Case for Industrial Policy in an Open Economy. Oxford Economic Papers 51, 40-59.

Levin, Richard, and Peter Reiss. 1988. Cost-reducing and Demand-creating R&D with Spillovers. RAND Journal of Economics 19, 538-556.

Miyagiwa, Kaz, and Yuka Ohno. 1997. Strategic R&D Policy and Appropriability. Journal of International Economics 42, 125-148.

Muniagurria, Maria, and Nirvikar Singh. 1997. Foreign Technology, Spillovers, and R&D policy. International Economic Review 38, 405-430.

Park, Jungsoo. 2004. International and Intersectoral R&D Spillovers in the OECD and East Asian Economies. Economic Inquiry 42, 739-757.

Peck, Merlon. 1986. Joint R&D: The Case of Microelectronics and Computer Technology Corporation. Research Policy 15, 219-231.

Spencer, Barbara, and James Brander. 1983. International R&D Rivalry and Industrial Strategy. Review of Economic Studies 50, 707-722.

The Washington Post. 1992. A New Cold War Aims to Produce a Finer Fridge: Utilities Offer $30 Million Prize for Energy, Environmental Gains, December 20, 1992, H1, H5.

Zhou, Haiwen. 2006. R&D Tournaments with Spillovers. Atlantic Economic Journal 34, 327-339.