Subsidy Policies and R&D Activities: A Theoretical Analysis

Manuela Pal and Mansh Ranjan Gupta
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Manuela Pal: Bethune College
Mansh Ranjan Gupta: Indian Statistical Institute

Indian Economic Review, 2000, vol. 35, issue 1, 21-40

Abstract: We develop a theoretical model of strategic competition between the home firm and the foreign firm in the home market of a less developed country. Both the firms receive subsidy on the R&D activities from their governments. We analyze the properties of optimal subsidy policies of the governemnts of the two countries in the two cases: (i) each of the two governments maximizes her own welfare, (ii) both of them maximize the joint welfare.

JEL-codes: H2 (search for similar items in EconPapers)
Date: 2000
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