Leahy, Dermot and Neary, J Peter (1996) International R&D rivalry and industrial strategy without government commitment. Review of International Economics, 4. pp. 322-338. ISSN 0965-7576

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Abstract

We examine optimal industrial and trade polices 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 inter temporally 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.

Item Type:	Article
Keywords:	Research & Development; R&D subsidies; Strategic trade policy; Export subsidies; Commitment; Dynamic consistency;
Academic Unit:	Faculty of Social Sciences > Economics, Finance and Accounting
Item ID:	12787
Depositing User:	Dermot Leahy
Date Deposited:	21 Apr 2020 10:30
Journal or Publication Title:	Review of International Economics
Publisher:	Wiley
Refereed:	Yes
URI:	Publisher
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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