Leahy, Dermot
(2016)
Strategic R&D Commitment and the Gains from
Trade.
Review of International Economics, 24.
pp. 1129-1148.
ISSN 0965-7576
Abstract
This paper examines how trade liberalization affects innovation, profits and welfare in a model of reciprocal
markets when firms pre-commit to research and development (R&D). We establish that the equilibrium is
not always unique and show that, with trade, R&D commitment leads to higher levels of innovation, lower
profits, higher consumer surplus and higher welfare than when R&D is chosen simultaneously to output levels.
Furthermore, if the effectiveness of R&D is sufficiently high, trade always yields higher welfare than
autarky, implying that R&D commitment may significantly enhance the welfare gains from trade
liberalization.
| Item Type: |
Article
|
| Keywords: |
Strategic; R&D Commitment;
Trade; |
| Academic Unit: |
Faculty of Social Sciences > Economics, Finance and Accounting |
| Item ID: |
8455 |
| Identification Number: |
https://doi.org/10.1111/roie.12250 |
| Depositing User: |
Dermot Leahy
|
| Date Deposited: |
12 Jul 2017 16:42 |
| Journal or Publication Title: |
Review of International Economics |
| Publisher: |
Wiley |
| Refereed: |
Yes |
| URI: |
|
| Use Licence: |
This item is available under a Creative Commons Attribution Non Commercial Share Alike Licence (CC BY-NC-SA). Details of this licence are available
here |
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