 Globalization and strategic research investmentsAnna Eulerich, geb. Bohnstedt, Christian Schwarz and Jens Suedekum Research Policy, 2012, vol. 41, issue 1, 13-23 Abstract: We develop a general equilibrium model of international trade with heterogeneous firms, where countries can invest into basic research to improve their technological potential. These research investments tighten firm selection and raise the average productivity of firms in the market, thereby implying lower consumer prices and higher welfare. In an open economy there is also a strategic investment motive, since a higher technological potential gives domestic firms a competitive advantage in trade. Countries tend to over-invest due to this strategic motive. There are thus welfare gains from coordinating research investments. The over-investment problem turns to an under-investment problem if there are sufficiently strong cross-country spillovers of basic research investments. Keywords: Public research investments; Public R&D; International trade; Heterogeneous firms; Basic research; Strategic trade policy (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:respol:v:41:y:2012:i:1:p:13-23 DOI: 10.1016/j.respol.2011.05.028 Access Statistics for this article Research Policy is currently edited by M. Bell, B. Martin, W.E. Steinmueller, A. Arora, M. Callon, M. Kenney, S. Kuhlmann, Keun Lee and F. Murray More articles in Research Policy from Elsevier |
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