International R&D Rivalry with Spillovers and Policy Cooperation in R&D Subsidies and Taxes

Abstract

We have investigated non-cooperative and jointly optimal R&D policies in the framework of Spencer & Brander (1983) in the presence of R&D spillovers. When R&D activities are strategic substitutes and the R&D game exhibits a positive externality, the result of Spencer & Brander (1983) reverses: the non-cooperative policy is a tax while the jointly optimal policy is a subsidy. Moreover, when R&D activities are strategic complements, the usual result of the prisoners' dilemma in the strategic subsidy game does not hold, implying that a welfare intervention is preferable over laissez-faire. When spillovers are sufficiently large, the joint welfare increases with subsidies being higher than those under non-cooperation.     

基于知识共享和知识溢出的企业R＆D合作策略分析

以D＇Aspremont ＆ Jacquemin模型（以下简称DJ模型）为基础,研究了基于知识共享和知识溢出条件下企业的R＆D合作行为。研究结果表明,在考虑知识共享的作用下,即使当溢出〈0.5时,R＆D合作依然有可能比R＆D竞争具有更高的研发投资、产业总产量和社会总福利。     

R&D, Human Capital and International Technology Spillovers: A Cross-country Analysis

This paper is based on recent developments in the theory of innovation-driven growth that emphasize both the importance of R&D efforts — domestic as well as foreign — for explaining national productivity, and the complementarity between R&D and human capital investments. Estimates of specifications, in growth terms and in level terms, on a cross-section of OECD countries from the early 1960s to the early 1990s lend strong support to this thesis. The data show a significant influence of both domestic and foreign R&D. Moreover, there is clearly a net positive impact of human capital. The level and growth rate of human capital are shown to affect productivity growth and there is evidence of interaction with the catch-up process.
JEL classification: O 33; O 47     

International Knowledge Flows and Productivity: Intra- vs. Inter-Industry Spillovers

The effects of international knowledge spillovers on total factor productivity (TFP) at the industry level are examined by using a panel of 13 manufacturing industries across 15 OECD countries over 23 years. We distinguish between intra- and inter-industry spillovers from the information on patent applications and citations. Patent data are taken from the Japan Patent Office and the United States Patent and Trademark Office. Using four alternative spatial panel estimation techniques, we find that international knowledge spillovers within the same industry significantly contribute to sectoral TFP. In contrast, there is little evidence of a positive effect of international knowledge spillovers on TFP across industries.     

Trade-related R&D Spillovers in Vietnamese Manufacturing

ABSTRACT

This study aims to examine how Vietnamese manufacturing could benefit from R&D investment locally and from OECD countries through trade during a period marked with major trade liberalisations. Using the industry-level data during 2000–2009, it finds that the foreign R&D has accounted for the most part of the R&D spillovers in the sector, with a larger proportion earning from the other foreign industries’ R&D. The domestic industries’ own R&D has improved the sector’s total factor productivity, but in a relatively smaller magnitude compared to the foreign sources. In examining the localised effects of R&D spillovers in Vietnamese manufacturing, the results reiterate the important roles of trade-embedded foreign R&D spillovers from Japan, the US, South Korea, and Germany in the sector’s total factor productivity growth. These findings altogether give support to foreign technology diffusion as a major conduit for growth prospects in Vietnamese manufactures.     

R&D Spillovers and Growth: Specialization Matters

We explore the relationship between openness and growth by taking a closer look at trade‐related knowledge spillovers at the industry level. First, we estimate the relation between sectoral R&D expenditures, trade‐related spillovers, and growth. Next, we incorporate these R&D linkages in a computable general‐equilibrium model for the world economy. We simulate trade liberalization in the model with R&D spillovers and compare the effects on GDP in different regions with a non‐R&D‐based model simulation. We find that the GDP effects of trade liberalization are magnified considerably by R&D spillovers for some regions—notably Japan and Southeast Asia. In other regions, such as China, the additional GDP effects are modest. These findings can be traced back to changing specialization and import patterns.     

R&D Spillovers and Location Choice under Cournot Rivalry

A model of location choice by Cournot oligopolists is presented, under the assumption that R&D spillovers depend on the distance between firms. It is shown that a variety of patterns emerge. Agglomeration is optimal under certain assumptions. Geographical dispersion in a two-dimensional plane is another possible outcome.     

Entry Solicitation and Deterrence in R&D Competition with Spillovers

The purpose of this note is to examine incumbent behaviour and patterns of entry under R&D competition with spillovers. We find that, in addition to blockading, deterring and accommodating entry, the incumbent may also solicit entry. Entry solicitation occurs when the incumbent strategically alters its R&D commitment in order to take advantage of the spillover generated by the entrant's subsequent R&D investment. Although our results are placed in the context of R&D with spillovers, they are applicable to a wider class of models involving positive externalities, particularly network externalities.
JEL Classification Numbers: L12, O31.     

Multinationals,R&D and Endogenous Productivity Asymmetries

We analyze the influence of endogenous productivity asymmetries between firms, in terms of competitiveness and size, on multinational activity. In the model, productivity depends on cost-reducing R&D (research and development). We show that when firms differ on commitment power in R&D, the R&D leader, independently of being a multinational or a domestic firm, tends to invest more in R&D than the R&D follower. Because of these productivity advantages, the R&D leader can more easily become multinational. Therefore, in addition to the proximity-concentration trade-off, we identify another FDI (foreign direct investment) determinant: technological competition.     

R&D and Productivity in German Manufacturing Firms

This papcr uses a new firm panel data set to explore the relationship between R&D and productivity in German manufacturing firms for the period from 1979 to 1989. The results confirm the view that K&D is an important determinant of productivity growth. In the cross-section, the elasticity of sales with respect to R&D capital is on the order of 14 per cent. Using fixed-effects estimators yields R&D elasticities of about 8 per cent. Assuming different depreciation rates for R&D capital has virtually no effect on these results. Differencing estimates improve considerably when growth rates are computed over longer time periods, suggesting that the divergence between time-series and cross-sectional estimates is driven by random measurement errors. The paper also considers differences between high technology and other firms. Cross-section and panel elasticity estimates of the R&D effect diverge considerably for the two groups, while the corresponding rate of return estimators display far less variation. There is some evidence that the R&D elasticity increased during the early 1980s, and that it fell sharply back to its 1979 value during the period from 1985 to 1989.     

International R&D spillovers and institutions

The empirical analysis in “International R&D Spillovers” [Coe, D., Helpman, E., 1995. International R&D Spillovers. European Economic Review, 39, 859-887] is first revisited on an expanded data set that we have constructed for the purpose of this study. The new estimates confirm the key results reported in Coe and Helpman about the impact of domestic and foreign R&D capital stocks on TFP. In addition, we show that domestic and foreign R&D capital stocks have measurable impacts on TFP even after controlling for the impact of human capital. Furthermore, we extend the analysis to include institutional variables. Our results suggest that institutional differences are important determinants of TFP and that they impact the degree of R&D spillovers. Countries where the ease of doing business and the quality of tertiary education systems are relatively high tend to benefit more from their own R&D efforts, from international R&D spillovers, and from human capital formation. Strong patent protection is associated with higher levels of total factor productivity, higher returns to domestic R&D, and larger international R&D spillovers. Finally, countries whose legal systems are based on French and, to a lesser extent, Scandinavian law benefit less from their own and foreign R&D capital than countries whose legal origins are based on English or German law.     

International R&D Spillovers,Absorptive Capacity and Relative Backwardness: A Panel Smooth Transition Regression Model

We investigate how a country's absorptive capacity and relative backwardness affect the impact of international R&D spillovers on domestic Total Factor Productivity (TFP). To account for nonlinearities, we adopt a Panel Smooth Transition Regression approach, where a country's TFP elasticity to the foreign R&D stock is allowed to change smoothly across various identified extreme values, and the change is related to observable transition variables: human capital (capturing the country's absorptive capacity) and relative backwardness. The results suggest that absorptive capacity is positively associated with international R&D spillovers. In contrast with previous results, relative backwardness is instead found to have a negative and significant impact on international knowledge spillovers.     

Multinational Production, Absorptive Capacity, and Endogenous R&D Spillovers

Do R&D spillovers have an impact on whether firms choose to go multinational or not? We present a three‐stage Cournot duopoly model, which identifies under what conditions firms choose to service a foreign market through exports or localized production. The establishment of a foreign subsidiary improves the ability to learn from foreign R&D since spillovers are strongly moderated by geographical distance. We explicitly model the concept of absorptive capacity, where gains from spillovers are determined by own R&D investments. With exogenous R&D investments, the absorptive capacity effect contributes to increase the gains from going multinational when the firm is R&D‐intensive. However, if R&D investments are endogenous, only medium‐sized absorptive capacity effects will result in firms going multinational. Furthermore, higher spillover rates do not necessarily drive down R&D and profits for the multinational firm. This stands in contrast to models that ignore absorptive capacity effects.     

Subsidizing Technological Innovations in the Presence of R&D Spillovers

Abstract. We analyze a situation where a principal wants to induce two firms to produce an output, for example electricity from renewable energy sources. Firms can undertake non-contractible investments to reduce production cost of the output. Part of these investments spills over and also reduces production cost of the other firm. Comparing a general price subsidy and an innovation tournament, we find that the principal's expected cost of implementing a given expected output is always higher under the tournament, even though this scheme may lead to more innovation.     

Knowledge specialization and R&D collaboration

This paper contributes to the knowledge-based explanation of R&D networks. It argues that knowledge overlap and novelty are complementary inputs of a R&D alliance, in forms that depend upon the exploration breadth and depth of the R&D activity. The paper investigates how the hypothesis of specialization of the knowledge endowments can recover a number of characteristic empirical properties of a pattern of R&D collaboration in the economy. Implications for network evolution are discussed.     

Vertical R&D Spillovers,Cooperation, Market Structure,and Innovation

This paper studies vertical R&D spillovers between upstream and downstream firms. The model incorporates two vertically related industries, with horizontal spillovers within each industry and vertical spillovers between the two industries. Four types of R&D cooperation are studied: no cooperation, horizontal cooperation, vertical cooperation, and simultaneous horizontal and vertical cooperation. Vertical spillovers always increase R&D and welfare, while horizontal spillovers may increase or decrease them. The comparison of cooperative settings in terms of R&D shows that no setting uniformly dominates the others. Which type of cooperation yields more R&D depends on horizontal and vertical spillovers, and market structure. The ranking of cooperative structures hinges on the signs and magnitudes of three "competitive externalities" (vertical, horizontal, and diagonal) which capture the effect of the R&D of a firm on the profits of other firms. One of the basic results of the strategic investment literature is that cooperation between competitors decreases R&D when horizontal spillovers are low; the model shows that this result does not necessarily hold when vertical spillovers are sufficiently high, and/or when horizontal cooperation is combined with vertical cooperation.     

Spillovers,product innovation and R&D cooperation: a theoretical model

ABSTRACT

We analyze the impact of post-innovation knowledge spillovers on firms’ decisions to invest and cooperate in R&D, forming a research joint venture (RJV). We study the case of two potential investors involved in a non-tournament stochastic competition for developing a new but imitable product. We propose a theoretical model where cooperation may emerge as a subgame perfect Nash equilibrium of a three-stage game. In the first stage, firms decide whether to cooperate; in the second, they decide whether to invest; and in the third, they compete. We show that firms cooperate in R&D when the spillovers are high enough and the fixed costs associated with R&D activities are low enough; however, our analysis suggests that forming an RJV may not always be socially optimal, and subsidizing R&D cooperation may not be efficient. We propose an optimal scheme of subsidies, which should be designed according to the intensity of the spillovers, the level of the R&D costs, and the probability of innovation success. Finally, we show that in the case of mergers the private incentive to invest is maximized, and firms may not need public subsidies to cooperate. When subsidies are costly, not hindering mergers may be the second-best solution.     

R&D Returns,Spillovers and Firm Incentives: Evidence from China

Using a new data set of 12,000 firms in China, this paper estimates the returns to R&D investment and its spillover effects, and investigates how the returns to R&D depend on firm incentives. For the firms in the sample, the results show that on average firm output increases around 0.4 yuan for each additional 1 yuan spent on R&D in the previous year, and there is high R&D return regardless of whether the endogeneity of R&D intensity is dealt with or not. Interestingly, the marginal return to R&D is significantly higher in firms whose CEOs were not appointed by the government, and lower when CEO pay is directly related to annual performance. The return to R&D is higher in relatively poor regions and for firms with worse access to finance. There are also non-trivial R&D spillover effects.     

开放经济下知识资本与全要素生产率——国际经验与中国启示

本文就知识资本对全要素生产率的影响效应进行比较分析,文中把国内知识资本分为研发资本、人力资本、创新设施资本和技术资本以及国外知识资本分为进口和FDI溢出知识资本,以130个经济体1981—2010年间的面板数据,依据系统聚类法将130个经济体划分为创新领导型、创新追赶型和创新缓慢型三类俱乐部样本,运用宏观知识生产函数模型对知识资本与全要素生产率的影响效应进行了实证检验。结果显示:国内知识资本和国外知识资本的溢出都是影响全要素生产率提升的重要因素,但是不同知识资本要素对不同创新经济体全要素生产率的影响存在明显差异:研发资本、技术资本和FDI渠道对创新领导俱乐部的促进作用大于创新追赶和创新缓慢俱乐部;人力资本和进口渠道对创新追赶俱乐部的促进作用大于创新领导和创新缓慢俱乐部;创新设施资本和技术差距对创新缓慢俱乐部的促进作用大于创新领导和创新追赶俱乐部。我国正处在创新追赶型国家向创新领导型国家转变的重要阶段,创新政策的重点应促进国内外各创新资源的有效配置,增强知识资本投入产出能力,加快提高全要素生产率。     

Intersectoral Spillovers,Relative Prices and Development Traps

Why is the economic growth rate so low in poor countries? This paper offers an explanation by using a simple two‐sector AK growth model with intersectoral linkages and high relative prices of intermediate goods. Intersectoral linkages lead to two balanced growth paths (BGPs). The high‐growth BGP is a source. The low‐growth BGP is a sink because it has a small final goods sector, small intersectoral spillovers from the final goods sector to the intermediate goods sector, and small marginal products in the intermediate goods sector, yielding high relative prices of intermediate goods. The low‐growth BGP is an attractor and thus development trap. To produce a big push effect, this paper analyzes the first‐best policy and finds that a subsidy to own consumption and a provision of public goods to the final goods sector can internalize the external effect and render the low‐growth BGP infeasible. As a result, there is only the high‐growth BGP.