MURAL - Maynooth University Research Archive Library

    Strategic Investment and the Gains from Trade (N216-11)

    Dewit, Gerda and Leahy, Dermot (2011) Strategic Investment and the Gains from Trade (N216-11). NUI Maynooth, NUI Maynooth. (Unpublished)

    [img] Download (112kB)

    Share your research

    Twitter Facebook LinkedIn GooglePlus Email more...

    Add this article to your Mendeley library


    This paper examines how trade liberalisation affects innovation, profits and welfare when firms are engaging in strategic R&D investment. We show that there are multiple equilibria including an autarky equilibrium for a range of high but non-prohibitive trade costs. At lower trade costs, only the trading equilibrium survives. Welfare is U-shaped in the trade costs, so a small fall in trade costs can be welfare reducing. However we find a threshold level of the effectiveness of investment above which trade is always welfare superior to autarky.

    Item Type: Other
    Keywords: Reciprocal Markets; Strategic R&D Investment; Trade Costs; Trade Liberalisation; Effectiveness of R&D;
    Academic Unit: Faculty of Social Sciences > Economics, Finance and Accounting
    Item ID: 2462
    Identification Number: N216-11
    Depositing User: Ms Sandra Doherty
    Date Deposited: 07 Mar 2011 14:12
    Publisher: NUI Maynooth
      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

      Repository Staff Only(login required)

      View Item Item control page


      Downloads per month over past year

      Origin of downloads