RT Generic
T1 The role of commitment and the choice of trade policy instruments
A1 Kujal, Praveen
A1 Costa-Cabral, Célia
A2 Universidad Carlos III de Madrid. Departamento de Economía, 
AB The incentives for governments to impose subsidies and tariffs on R&D and output is analyzed in a differentiated good industry where firms invest in a cost saving technology. When government commitment is credible, subsidies to R&D and output are positive both under Bertrand and Cournot competition. In the absence of government commitment the policy instrument is a tariff under Bertrand, and a subsidy under Cournot, competition. However, welfare under free trade is always greater than imposing a tariff unilaterally, or bilaterally, and hence non-committal under price competition is never an equilibrium. If a government has to choose either a subsidy on R&D (or on output) then, independent of price or quantity competition, it subsidies R&D for low levels of product substitutability and output for higherlevels of substitutability.
SN 2340-5031
YR 1999
FD 1999-10
LK https://hdl.handle.net/10016/6166
UL https://hdl.handle.net/10016/6166
LA eng
DS e-Archivo
RD 29 jun. 2024