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:: Volume 26, Issue 88 (Quarterly journal of EconomicResearch and policies 2019) ::
3 2019, 26(88): 177-208 Back to browse issues page
Role of Government Support on R&D in Development of Exporting Industries in International Duopoly Markets
Younes Brumand , Kiumars Shahbazi
urmia university , y.brumand@yahoo.com
Abstract:   (277 Views)
In strategic trade policy, governments support their domestic firms in many ways in order to promote their performance in the international field. One of these ways is R&D subsidies. In this paper, the strategic interaction among two governments and two firms which exporting homogenous commodities to the global market is analyzed using the game theory. The interaction is analyzed in a two-stage dynamic game with complete but imperfect information setting, which in the first stage, governments decide about granting or not granting the subsidies to their domestic firms, and in the second stage, firms decide whether allocate resources to R&D or not. The unique subgame perfect equilibrium of the game indicates that governments support their domestic firms and firms allocate some resources to the R&D process. Although this outcome may result in the prisoner's dilemma for governments in developed countries, it is an optimal solution for developing countries such as Iran. The equilibrium is also consistent with the general policies of the resistive economy.
 
 
Keywords: R&D Subsidy, Strategic Trade Policy Subgame Perfect Equilibrium
Full-Text [PDF 1372 kb]   (86 Downloads)    
Type of Study: Research | Subject: Special
Received: 2017/09/27
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brumand Y, shahbazi K. Role of Government Support on R&D in Development of Exporting Industries in International Duopoly Markets . 3. 2019; 26 (88) :177-208
URL: http://qjerp.ir/article-1-1890-en.html


Volume 26, Issue 88 (Quarterly journal of EconomicResearch and policies 2019) Back to browse issues page
فصلنامه پژوهشها و سیاستهای اقتصادی Journal of Economic Research and Policies
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