R&D Subsidies, Multinational Firm Ownership, and Exporting
Richard T. Gretz
Robert C. Scott
Bradley University - Foster College of Business Administration
July 2, 2008
We examine the question of whether a country benefits by subsidizing the R&D of foreign owned monopoly firms. We allow for any proportion of foreign ownership; and, R&D improves the product so that customers directly benefit. The policy implications are: (1) the optimal subsidy increases with the percentage of home ownership; (2) the subsidy amount increases with increased exports, but the subsidy rate decreases; and (3) some variables associated with decreasing home sales are also associated with a higher probability of a positive subsidy.
Number of Pages in PDF File: 20
Keywords: Research and Development Expenditure, Subsidy, Quality Improvement, Multinationals, Exporting
JEL Classification: O38, F23, D42working papers series
Date posted: July 6, 2008
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