Trade Liberalisation and Optimal R&D Policies in a Model of Exporting Firms Conducting Process Innovation

Thanh Le and Cuong Le van

Documents de travail du Centre d'Economie de la Sorbonne from Université Panthéon-Sorbonne (Paris 1), Centre d'Economie de la Sorbonne

Abstract: This paper discusses the impact of trade liberalisation and R&D policies on exporting firms' incentive to innovate and social welfare. Key factors determining the government's optimal policy are the strength of R&D spillover effect and the toughness of firm competition. When firms only compete in an overseas market, the optimal policy is to tax R&D. Trade liberalisation in the overseas market induces a higher R&D tax rate to be imposed on firms. When firms also conduct business in the home market, the government should financially support firms' R&D. Trade liberalisation always increases firms' output sales, R&D investments, and social welfare

Keywords: Trade; R&D spillovers; subsidies; welfare; process innovation (search for similar items in EconPapers)
JEL-codes: F12 F13 F15 O31 (search for similar items in EconPapers)
Pages: 27 pages
Date: 2016-03
New Economics Papers: this item is included in nep-cse, nep-ino, nep-int, nep-knm and nep-sbm
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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ftp://mse.univ-paris1.fr/pub/mse/CES2016/16028.pdf (application/pdf)

Related works:
Working Paper: Trade Liberalisation and Optimal R&D Policies in a Model of Exporting Firms Conducting Process Innovation (2016)
Working Paper: Trade Liberalisation and Optimal R&D Policies in a Model of Exporting Firms Conducting Process Innovation (2016)
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Persistent link: https://EconPapers.repec.org/RePEc:mse:cesdoc:16028

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