Citation

Discussion Paper Details

Please find the details for DP1671 in an easy to copy and paste format below:

Full Details   |   Bibliographic Reference

Full Details

Title: R&D Spillovers and the Case for Industrial Policy in an Open Economy

Author(s): Dermot Leahy and J Peter Neary

Publication Date: July 1997

Keyword(s): Industrial Policy, R&D Spillovers and StrategicTrade Policy

Programme Area(s): International Trade and Regional Economics

Abstract: In this paper we consider the case for subsidies towards firms which generate R&D spillovers in open economies. We show that in the presence of strategic behaviour by firms many expected results are overturned. 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-internalizes 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.

For full details and related downloads, please visit: https://cepr.org/active/publications/discussion_papers/dp.php?dpno=1671

Bibliographic Reference

Leahy, D and Neary, J. 1997. 'R&D Spillovers and the Case for Industrial Policy in an Open Economy'. London, Centre for Economic Policy Research. https://cepr.org/active/publications/discussion_papers/dp.php?dpno=1671