Work

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

Year: 1999

Type: article

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-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.

Source: Oxford Economic Papers

DOI: 10.1093/oep/51.1.40

Author: D Leahy

Institution: University College Dublin

Language: English

Topic: Innovation Policy and R&D

Subfield: Economics and Econometrics

Field: Economics, Econometrics and Finance

Domain: Social Sciences

SDG: Industry, innovation and infrastructure

Open Access status: bronze

Funders: London School of Economics and Political Science, Centre for Economic Policy Research, Economic and Social Research Council