Allocation of the Public R&D Budget: The Impact of International Competitive Advantages and R&D Alliances. Issue 2 (3rd April 2021)

• Record Type: Journal Article
• Authors: Silei, David
• Is Part Of: International economic journal. Volume 35:Issue 2(2021)
• Page Start: 171
• Page End: 204
• Publication Date: 2021-04-03
• Subjects: International R&D cooperation -- R&D policy -- international competitive advantage -- R&D spillover; Economics -- Periodicals; International economic relations -- Periodicals; Korea (South) -- Economic conditions -- 1960- -- Periodicals; 337
• DOI: 10.1080/10168737.2021.1916773
• Languages: English
• ISSNs: 1016-8737

Abstract

Abstract : I consider a two-country model, in which two asymmetric firms invest in R&D to increase their competitiveness and compete over the supply of a homogeneous product, and the government grants R&D subsidies to increase welfare. In this setting I show that optimal R&D policy is affected by industrywide international competitive advantages. Similar to conventional wisdom on strategic trade policy, competitive advantages have a positive impact on the optimal amount of R&D subsidy in the case of R&D competition. With international R&D cooperation, this conclusion is reversed: subsidising the more competitive firm may have, if any, very little impact on domestic welfare.