Economic Integration, Process and Product Innovation, and Relative Skill Demand

Sebastian Braun ()

Review of International Economics, 2008, vol. 16, issue 5, pages 864-873

Abstract: The interaction between economic integration, product and process innovation, and relative skill demand is analyzed in a model of international oligopoly. Lower trading barriers increase the degree of foreign competition. The competing enterprises respond by investing more aggressively in lowering marginal costs of production. Moreover, firms reduce the substitutability of their products through additional investment in product innovation. The paper also shows that the relative demand for skilled workers may increase as a result. Copyright © 2008 The Author. Journal compilation © 2008 Blackwell Publishing Ltd.

Date: 2008
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