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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.

Keywords: F13

Document Type: Research Article

DOI: http://dx.doi.org/10.1111/j.1540-5982.2006.00367.x

Affiliations: Division of International Studies, Korea University

Publication date: August 1, 2006

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