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We examine research and development (R\u26D) policies when a national firm forms an R\u26D alliance with a foreign competitor. Firms differ in their R\u26D capabilities, and adopt a profit-sharing rule when R\u26D decisions are coordinated. National R\u26D tax/subsidy policies are set independently or harmonized. When firms coordinate their R\u26D decisions and governments choose R\u26D policies independently, R\u26D taxes are chosen. But there is no intervention if policies are harmonized. These policy outcomes affect the types of R\u26D alliance choosen. Agreements to share R\u26D information may be preferred to those combining coordination of R\u26D decisions and information sharing because of the R\u26D tax that coordination attracts

Competitive and Harmonised R&D Policies for International R&D Alliances Involving Asymmetric Firms