 Trade Policy in the Presence of Technology Licensing*Arghya Ghosh and Souresh Saha Review of International Economics, 2008, vol. 16, issue 1, 45-68 Abstract: We consider strategic trade policy when a high‐cost and a low‐cost firm belonging to two different countries compete in quantities in a third country, and technology is transferable via licensing. We characterize the effects of subsidies on (i) licensing payments—a new source of rents, (ii) the decision to license, and (iii) the subsidy bill difference (compared to when licensing is infeasible). We find that, in the presence of licensing, optimal strategic trade policy has several interesting features. For example, even under Cournot competition, optimal policy can be an export tax instead of an export subsidy. Also, unlike results in strategic trade policy with asymmetric costs, we find that optimal export subsidies are not necessarily positively related to the cost‐competitiveness of firms. In other words, governments need not necessarily favor “winners” when licensing is possible. Furthermore, there exist parameterizations such that a government, if it can, might ban licensing. Date: 2008 Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:bla:reviec:v:16:y:2008:i:1:p:45-68 Ordering information: This journal article can be ordered from Access Statistics for this article Review of International Economics is currently edited by E. Kwan Choi More articles in Review of International Economics from Wiley Blackwell |
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