Endogenous transport price and international R&D rivalry

Economic Modelling, 2015, vol. 46, issue C, 36-43

Abstract: The purpose of this paper is to consider the relationship between monopoly transport prices and an industry’s technology level of research and development (R&D). Although R&D efficiency is often considered a key factor to improve the performance of firms in an industry, we demonstrate that this standard view does not always hold in a trade model involving a monopoly transporter. In a one-way duopoly case, an exporter competes with a local firm in the local market but must pay a transport charge to the monopoly transporter to carry its product. We show that higher R&D efficiency may reduce the investments of an exporter. We further investigate a case of two-way trade comprising two symmetric countries. We also show that higher R&D efficiency may reduce the producers’ profit.

Keywords: Transporter; R&D activity; Transport charge; R&D efficiency (search for similar items in EconPapers)
Date: 2015
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (15)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecmode:v:46:y:2015:i:c:p:36-43

DOI: 10.1016/j.econmod.2014.12.019

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