Economic Integration, Intensity of Competition and R&D Incentives
نویسنده
چکیده
A two-country differentiated duopoly model is set out in which economic integration increases firms’ incentives to invest in R&D, purely through the effect of increased intensity of competition between firms. The model is extended to incorporate knowledge spillovers, which, if related to the degree of integration, give rise to an inverted u-shaped relationship between R&D incentives and integration. The model is also extended to the n-firm general equilibrium case in which integration stimulates economic growth through intensity of competition. As such, the model suggests a positive growth effect of economic integration that does not rely on the usual scale effects. *Correspondence Address: Duncan McVicar, NIERC, 46-48 University Road, Belfast BT7 1NJ, UK. [email protected]. + The support of ESRC Award No. R00429534230 is gratefully acknowledged, as are helpful comments from John Driffill, Iestyn Williams and seminar participants at Southampton and at York University, Toronto. The usual disclaimer applies.
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