R&D spillovers and the case for industrial policy in an open economy

Dermot Leahy and J. Peter Neary

LSE Research Online Documents on Economics from London School of Economics and Political Science, LSE Library

Abstract: In this paper we consider the case for subsidies towards firms which generate R&D spillovers in open economies. We show that many expected results are overturned in the presence of strategic behaviour by firms. Local R&D spillovers to other domestic firms may justify an R&D tax rather than a subsidy; R&D cooperation by local firms over-internalises the externality and also justifies an R&D tax; and international spillovers which benefit foreign firms may justify a subsidy, even though the government cares only about the profits of home firms.

JEL-codes: J01 R14 (search for similar items in EconPapers)
Pages: 36 pages
Date: 1997-04
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Citations: View citations in EconPapers (9)

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Related works:
Journal Article: R&D Spillovers and the Case for Industrial Policy in an Open Economy (1999)
Working Paper: R&D Spillovers and the Case for Industrial Policy in an Open Economy (1997)
Working Paper: R&D Spillovers and the Case for Industrial Policy in an Open Economy (1997)
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Persistent link: https://EconPapers.repec.org/RePEc:ehl:lserod:20342

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