Technological Rivalry and Optimal Dynamic Policy in an Open Economy

Yan Bai, Keyu Jin and Dan Lu

No 31703, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: What are a country’s policy options concerning the development of emerging technologies in a global economy? To address this question, we investigate optimal dynamic policies in an open economy where technology is endogenously accumulated through R&D innovation. Our key insight is that a country has incentives to influence foreign innovation efforts across sectors and over time—giving rise to optimal policies even when private innovation allocations are (Pareto) efficient. We derive explicit expressions for optimal taxes linked to both an intratemporal and an intertemporal motive to manipulate foreign technology. To affect foreign forward-looking innovation decisions, Home uses committed future trade policies (Ramsey) or innovation policies (Markov). For intratemporal price manipulation, Home government imposes higher tariffs in sectors where it has a comparative advantage.

JEL-codes: E23 F12 F63 O38 (search for similar items in EconPapers)
Date: 2023-09
New Economics Papers: this item is included in nep-cse, nep-ger, nep-ino, nep-int, nep-opm and nep-tid
Note: EFG IFM ITI
References: Add references at CitEc
Citations:

Downloads: (external link)
http://www.nber.org/papers/w31703.pdf (application/pdf)
Access to the full text is generally limited to series subscribers, however if the top level domain of the client browser is in a developing country or transition economy free access is provided. More information about subscriptions and free access is available at http://www.nber.org/wwphelp.html. Free access is also available to older working papers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:nbr:nberwo:31703

Ordering information: This working paper can be ordered from
http://www.nber.org/papers/w31703
The price is Paper copy available by mail.

Access Statistics for this paper

More papers in NBER Working Papers from National Bureau of Economic Research, Inc National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.. Contact information at EDIRC.
Bibliographic data for series maintained by (wpc@nber.org).