International R&D Rivalry and Industrial Strategy

Barbara Spencer and James Brander

Working Paper from Economics Department, Queen's University

Abstract: This paper presents a theory of government intervention which provides an explanation for "industrial strategy" policies such as R&D or export subsidies in imperfectly competitive international markets. Domestic net welfare improves by capturing a greater share of the output of rent earning industries, although the subsidy-ridden noncooperative international equilibrium is jointly suboptimal. Behaviour of governments and firms is modelled as a three-stage subgame perfect Nash equilibrium. The assumption that government is the first player allows it to influence equilibrium outcomes by altering the set of credible actions by the firm.

Pages: 36
Date: 1982
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Citations: View citations in EconPapers (3)

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Related works:
Journal Article: International R & D Rivalry and Industrial Strategy (1983)
Working Paper: International R & D Rivalry and Industrial Strategy (1983)
Working Paper: International R&D Rivalry and Industrial Strategy (1983)
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Persistent link: https://EconPapers.repec.org/RePEc:qed:wpaper:518

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