Entry Liberalization, Export Subsidy and R&D

Prabal Roy Chowdhury ()

MPRA Paper from University Library of Munich, Germany

Abstract: We examine, in the context of less developed countries, the R&D behaviour of igopolistic firms who compete over R&D, as well as output levels. We also assume that the firms can sell in either of the two markets - the domestic, or the foreign. We show that entry liberalization, despite increasing the level of competitiveness, does not affect the level of R&D. An increase in export subsidy may, however, lead to an increase in domestic R&D. Both these results contradict the popular argument that the levels of domestic R&D is positively related to the level of domestic competitiveness. We also demonstrate that any foreign firm that may enter selects a level of R&D that is atleast as efficient as that selected by any domestic firm. Finally, we demonstrate that entry liberalization has a positive effect on exports, as well as aggregate output.

Keywords: Entry liberalization; export subsidy; R&D; competitiveness. (search for similar items in EconPapers)
JEL-codes: F13 O32 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-com, nep-cse, nep-dev, nep-ipr and nep-mic
Date: 2006-02
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Persistent link: http://EconPapers.repec.org/RePEc:pra:mprapa:1532

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