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

Leahy, D. and Neary, J. P. (1997) R&D spillovers and the case for industrial policy in an open economy. CEPDP (345). London School of Economics and Political Science. Centre for Economic Performance, London, UK. ISBN 0853284377

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Abstract

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

Item Type:	Monograph (Discussion Paper)
Official URL:	http://cep.lse.ac.uk
Additional Information:	© 1997 the authors
Divisions:	Centre for Economic Performance
Subjects:	H Social Sciences > HD Industries. Land use. Labor
Date Deposited:	01 Aug 2008 14:48
Last Modified:	11 Dec 2024 18:23
URI:	http://eprints.lse.ac.uk/id/eprint/20342

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