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Regulatory Protection When Firms Decide First on Technical Collaboration and R&D
Author(s) -
Edwards Huw,
PoyagoTheotoky Joanna
Publication year - 2013
Publication title -
review of international economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.513
H-Index - 58
eISSN - 1467-9396
pISSN - 0965-7576
DOI - 10.1111/roie.12068
Subject(s) - duopoly , subsidy , order (exchange) , economics , competition (biology) , industrial organization , microeconomics , international economics , business , international trade , market economy , finance , cournot competition , ecology , biology
We investigate the imposition of a horizontal technical barrier to trade ( HTBT ) in a symmetric, cross‐hauling duopoly. Tariffs and subsidies are ruled out, but, in the absence of a mutual recognition agreement, governments can impose HTBTs , so long as firms operate different technologies. With firms being first movers, this possibility may induce them to avoid technical collaboration, in order to tempt governments into creating national monopolies, unless spillovers in R&D are high. This exacerbates the costs of regulatory protection, compared to standard models without R&D or spillovers.