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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. Centre for Economic Performance, London School of Economics and Political Science, London, UK. ISBN 0853284377

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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:
Additional Information: © 1997 the authors
Library of Congress subject classification: H Social Sciences > HD Industries. Land use. Labor
Sets: Collections > Economists Online
Research centres and groups > Centre for Economic Performance (CEP)
Identification Number: 345
Date Deposited: 01 Aug 2008 14:48

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