The authors thank the editor, two anonymous referees, and Patricia Webber for their many insightful suggestions.
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STRATEGIC RESEARCH AND DEVELOPMENT POLICY: SOCIETAL OBJECTIVES AND THE CORPORATE WELFARE ARGUMENT
Article first published online: 28 JUN 2008
DOI: 10.1111/j.1465-7287.2008.00109.x
© 2008 Western Economic Association International
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How to Cite
GRETZ, R. T., HIGHFILL, J. and SCOTT, R. C. (2009), STRATEGIC RESEARCH AND DEVELOPMENT POLICY: SOCIETAL OBJECTIVES AND THE CORPORATE WELFARE ARGUMENT. Contemporary Economic Policy, 27: 28–45. doi: 10.1111/j.1465-7287.2008.00109.x
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The authors thank the editor, two anonymous referees, and Patricia Webber for their many insightful suggestions.
Publication History
- Issue published online: 21 JAN 2009
- Article first published online: 28 JUN 2008
- Online Early publication June 28, 2008
- Abstract
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- Cited By
The article considers the optimal research and development subsidy regime in a two-firm two-country model where each firm is “located” in a specific country. Trade is intra-industry in that customers in both countries purchase from both firms. The article suggests that when both countries subsidize their local firm usually welfare increases compared to the case of zero subsidies. Making the same comparison, profit always falls in the symmetric game and falls about half the time in the asymmetric game. These results call into question some common notions about corporate welfare. (JEL O38, H25, F23)