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Trade policy mix: IPR protection and R&D subsidies

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This paper analyses strategic R&D policy under circumstances where intellectual property rights protection resulting from firms' R&D investment is not perfect. By examining policy choices wherein a government chooses both R&D subsidies and IPR protection levels simultaneously, we show that it is optimal for a government to adopt sufficiently weak IPR protection and to subsidize R&D investments of domestic firms. Inducing R&D investment of foreign rival firms will increase the profits of domestic firms.
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Keywords: F13

Document Type: Research Article

Affiliations: Division of International Studies, Korea University

Publication date: 2006-08-01

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