Trade and technology transfer in a vertically differentiated industry |
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Authors: | Dyuti S Banerjee Sugata Marjit |
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Institution: | (1) Department of Economics, Monash University, Clayton, VIC, 3800, Australia;(2) Centre For Studies in Social Science, R-1, Baishnabghata Patuli Township, Kolkata, 700094, India |
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Abstract: | This paper provides a model of trade and technology transfer in a vertically differentiated industry. We provide three key
results. First, freer trade allows an increase in the size of the import competing sector, a counterintuitive proposition.
Second, under reasonable conditions a foreign monopolist producing a relatively higher quality product will transfer technology
to the local producer for producing a relatively lower quality product. Third, government can design subsidies to induce technology
transfer and improve welfare.
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Keywords: | Product quality Subsidy Technology transfer |
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