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Department of Economics
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Brownbag Seminar on "Resource, competition and the general equilibrium effects of R&D subsidies"

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Speaker: Prof. QIU Dongxiao Larry
Date: 21 October 2020 (Wednesday)
Time: 12:00-13:00
Venue: WYL314

Abstract:
This study investigates the general equilibrium effects of innovation subsidies on firm and industry performances in a monopolistic competition model with resource constraint, firm heterogeneity, and endogenous entry and exit. Firms have different capabilities of conducting process R&D to determine their production productivity. We find that the effects of R&D subsidies on R&D investment and productivity, at both firm and industry levels, are nonlinear, exhibiting an inverted U shape. We examine the factors that affect the turning point of the inverted U shape. We also analyze the property of the optimal R&D subsidy and the applications across industries and countries.