Pros and Cons of Backing Winners in Innovation Policy

In the economics profession there is a fierce debate whether industrial and innovation policy should be targeted to specific sectors or firms. This paper discusses the welfare effects of such targeted policies in a third-market international trade model under imperfect competition. A theoretical case for picking winners through a preferential innovation policy is discussed, which is shown to hold without evoking retaliation from foreign competitors. However, in practice information uncertainties remain a concern. The question whether in this case ‘backing winners’ is a wise policy option depends on the characteristics of the information asymmetries and on the extent the government is able to design selection procedures in a way to minimize the transaction costs that may be caused from the market participants’ opportunistic behavior.Innovation policy; R&D subsidies, strategic trade policy, asymmetric information, spill-over effects

Chronic gastrointestinal symptoms and quality of life in the Korean population

AIM: To evaluate the prevalence of chronic gastrointestinal symptoms and their impact on health-related quality of life (HRQOL) in the Korean population

Essays on strategic trade policy

The first chapter considers a two-country two-sector third-market Cournot competition model to show that (i) a non-uniform rearrangement of the initially-uniform R&D subsidy/tax in a way which preserves the net government expenditure, or (ii) a non-uniform combination of R&D subsidies and taxes under initial free trade, increases the aggregate profit of the national firms without affecting other countries and, therefore, improves national and joint welfare of the trading countries. This provides a country with an incentive to create a national champion by treating its firms asymmetrically. The second chapter explains that the arguments of the first chapter remain valid under a variety of extensions including conjectural variations approach to the firms\u27 strategic behavior, asymmetric marginal costs and non-constant returns to scale. Domestic consumption of the oligopoly good and international R&D spill-over effects do not affect the arguments, either. The third chapter considers a two-country two-sector segmented-market Cournot duopoly under various scale economies to show that an intra-industry trade emerges from a reciprocal dumping incentive, and that a protective import tariff under non-constant returns to scale generates ‘intra-market profit shifting and profit creating effects’ and ‘cross-market substitution effects’. The cooperatively optimal tariff is smaller than the non-cooperative tariff but its sign is indeterminate, thus leading to the conclusion that the international efforts towards trade liberalization should be supported, although a managed trade ‘may’ be Pareto-superior to free trade depending on parameters

Essays on strategic trade policy

The first chapter considers a two-country two-sector third-market Cournot competition model to show that (i) a non-uniform rearrangement of the initially-uniform R&D subsidy/tax in a way which preserves the net government expenditure, or (ii) a non-uniform combination of R&D subsidies and taxes under initial free trade, increases the aggregate profit of the national firms without affecting other countries and, therefore, improves national and joint welfare of the trading countries. This provides a country with an incentive to create a national champion by treating its firms asymmetrically. The second chapter explains that the arguments of the first chapter remain valid under a variety of extensions including conjectural variations approach to the firms\u27 strategic behavior, asymmetric marginal costs and non-constant returns to scale. Domestic consumption of the oligopoly good and international R&D spill-over effects do not affect the arguments, either. The third chapter considers a two-country two-sector segmented-market Cournot duopoly under various scale economies to show that an intra-industry trade emerges from a reciprocal dumping incentive, and that a protective import tariff under non-constant returns to scale generates ‘intra-market profit shifting and profit creating effects’ and ‘cross-market substitution effects’. The cooperatively optimal tariff is smaller than the non-cooperative tariff but its sign is indeterminate, thus leading to the conclusion that the international efforts towards trade liberalization should be supported, although a managed trade ‘may’ be Pareto-superior to free trade depending on parameters

Pros and Cons of ‘Backing Winners’ in Innovation Policy

In the economics profession there is a fierce debate whether industrial and innovation policy should be targeted to specific sectors or firms. This paper discusses the welfare effects of such targeted policies from the perspective of strategic game theory of the firm. A theoretical case for picking winners through a preferential innovative policy is discussed in a third-market international trade model, which is shown to hold without evoking retaliation from foreign competitors. However, in practice information uncertainties remain a concern. The question whether in this case ‘backing winners’ is a wise policy option depends on the characteristics of the information asymmetries and on the extent the government is able to design selection procedures which minimize the transaction costs that may be caused from the market participants’ opportunistic behavior.Innovation policy, R&D subsidies, strategic trade policy, asymmetric information, spill-over effects

VirtualDub as a Useful Program for Video Recording in Real-time TEM Analysis

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Human contribution to the 2020 summer successive hot-wet extremes in South Korea

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