The effects of R&D subsidies for joint R&D in a vertically related industry

Naoto Jinji and Yoshitaka Kawagoshi

The Journal of International Trade & Economic Development, 2025, vol. 34, issue 7, 1809-1828

Abstract: In this study, we investigate the effects of research and development (R&D) subsidies for joint R&D in a vertically related industry with a three-country setting. The home government subsidises the home final-good firm for its joint R&D with the intermediate-good firm located in the rest of the world. Our results suggest that there may be room for revising the conditions for the countervailing measures in the Agreement on Subsidies and Countervailing Measures of the World Trade Organization. In one case, whereas the R&D subsidy hurts a foreign final-good firm, it improves both the home country’s and the world’s welfare.

Date: 2025
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DOI: 10.1080/09638199.2025.2513867

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