2024-03-28T21:30:38Zhttps://repositorio.bde.es/oai/requestoai:repositorio.bde.es:123456789/68972023-06-08T12:31:04Zcom_123456789_5661com_123456789_21col_123456789_5690
Cost effectiveness of R&D and strategic trade policy
Kujal, Praveen
Ruiz Pérez, Juan Manuel
Product differentiation
Strategic trade policy
Policy reversals
R&D
This paper analyzes the incentives for governments to impose export subsidies when firms invest in a cost saving technology before market competition. Governments first impose an export subsidy or a tax. After observing export policy, firms invest in cost reducing R&D and subsequently compete in the market. Governments subsidize exports under Cournot competition. Under Bertrand competition, export subsidies are positive whenever R&D is sufficiently cost-effective at reducing marginal costs, and negative otherwise. The trade policy reversal found in models without endogenous sunk costs disappears if R&D is sufficiently cost-effective. Thus, output subsidies seem more robust than implied by the recent literature
2007-01-03
Documento de trabajo
ISSN: 0213-2710 (en papel)
ISSN: 1579-8666 (en línea)
https://repositorio.bde.es/handle/123456789/6897
eng
Documentos de Trabajo / Banco de España, 0701
https://creativecommons.org/licenses/by-nc-sa/4.0/deed.es_ES
http://rightsstatements.org/vocab/InC-NC/1.0/
Reconocimiento-NoComercial-CompartirIgual 4.0 Internacional (CC BY-NC-SA 4.0)
In Copyright - Non Commercial Use Permitted
Banco de España
Madrid : Banco de España, 2007