Bulletin n. 3/2006
December 2006
CONTENTS
  • Section A) The theory and practise of the federal states and multi-level systems of government
  • Section B) Global governance and international organizations
  • Section C) Regional integration processes
  • Section D) Federalism as a political idea
    • Haaland Jan, Kind Hans Jarle
    Cooperative and Non-Cooperative R&D Policy in an Economic Union
    in Review of World Economics (Weltwirtschaftliches Archiv) , Vol. 142, No. 4 ,  2006
    What are the consequences of decentralized R&D policies within an economic union? Do non-cooperative policies generate too high R&D subsidies? To address such questions, we construct a simple model where firms invest in quality-improving R&D. With goods produced in different countries within an economic union, we compare non-cooperative and cooperative R&D policies. We show that non-cooperative policies imply too small R&D subsidies for horizontally differentiated goods and too high subsidies for close substitutes. Furthermore, small countries have less incentive to subsidize R&D than large countries, resulting in an unwarranted vertical product differentiation between goods produced in different countries.
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