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Leahy, Dermot (2016) Strategic R&D Commitment and the Gains from Trade. Review of International Economics, 24. pp. 1129-1148. ISSN 0965-7576
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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: | 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 |
| Related URLs: | |
| 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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