International Rent-shifting under Foreign Entry through R&D and Licensing

Jota Ishikawa and Toshihiro Okubo

No DP2010-20, Discussion Paper Series from Research Institute for Economics & Business Administration, Kobe University

Abstract: We explore international rent-shifting when a domestic firm and a foreign rival compete in the domestic market. To serve the market, the foreign firm has to acquire a production technology through either R&D or licensing obtained from the domestic firm. In the presence of both R&D and licensing, the domestic firm deters the foreign firm from engaging itself in R&D. Then the foreign government can shift the rent from the domestic firm either directly or indirectly. However, such rent-shifting opportunities may be deterred by the domestic government. The shifted rent could exceed the amount paid by the foreign firm for licensing.

Keywords: International oligopoly; R&D; Licensing; Rent-shifting (search for similar items in EconPapers)
JEL-codes: F13 (search for similar items in EconPapers)
Pages: 13 pages
Date: 2010-07
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Persistent link: https://EconPapers.repec.org/RePEc:kob:dpaper:dp2010-20

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