Technology Gap Matters on Spillover

This paper develops an oligopoly model with endogenous technology spillovers through foreign direct investment (FDI). The foreign entrant brings a superior technology and therefore may spend resources to prevent spillovers of its technology to the home firm. The home firm has an incentive to spend r...

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Main Author:	Sawada, Naotaka
Format:	Journal Article
Language:	EN
Published:	2012
Subjects:	Noncooperative Games C720 Multinational Firms International Business F230 Oligopoly and Other Imperfect Markets L130 Technological Change: Choices and Consequences Diffusion Processes O330
Online Access:	http://hdl.handle.net/10986/4917

id	okr-10986-4917
recordtype	oai_dc
spelling	okr-10986-49172021-04-23T14:02:20Z Technology Gap Matters on Spillover Sawada, Naotaka Noncooperative Games C720 Multinational Firms International Business F230 Oligopoly and Other Imperfect Markets L130 Technological Change: Choices and Consequences Diffusion Processes O330 This paper develops an oligopoly model with endogenous technology spillovers through foreign direct investment (FDI). The foreign entrant brings a superior technology and therefore may spend resources to prevent spillovers of its technology to the home firm. The home firm has an incentive to spend resources to gain these spillovers. After firms strategically choose their expenditures to influence technology spillovers, they compete in a Cournot-Nash quantity game. This study provides theoretical insight on the positive and negative empirical spillover results of FDI on productivity of local firms. Up to a critical bound, the larger the initial technology gap between the foreign and home firms, the more the home firm spends to gain spillovers. Past that boundary, the home firm decreases spending. As a result, the home firm's profits from spillovers vary, but larger technology gaps engender greater net profit losses from FDI. 2012-03-30T07:30:22Z 2012-03-30T07:30:22Z 2010 Journal Article Review of Development Economics 13636669 http://hdl.handle.net/10986/4917 EN http://creativecommons.org/licenses/by-nc-nd/3.0/igo World Bank Journal Article
repository_type	Digital Repository
institution_category	Foreign Institution
institution	Digital Repositories
building	World Bank Open Knowledge Repository
collection	World Bank
language	EN
topic	Noncooperative Games C720 Multinational Firms International Business F230 Oligopoly and Other Imperfect Markets L130 Technological Change: Choices and Consequences Diffusion Processes O330
spellingShingle	Noncooperative Games C720 Multinational Firms International Business F230 Oligopoly and Other Imperfect Markets L130 Technological Change: Choices and Consequences Diffusion Processes O330 Sawada, Naotaka Technology Gap Matters on Spillover
relation	http://creativecommons.org/licenses/by-nc-nd/3.0/igo
description	This paper develops an oligopoly model with endogenous technology spillovers through foreign direct investment (FDI). The foreign entrant brings a superior technology and therefore may spend resources to prevent spillovers of its technology to the home firm. The home firm has an incentive to spend resources to gain these spillovers. After firms strategically choose their expenditures to influence technology spillovers, they compete in a Cournot-Nash quantity game. This study provides theoretical insight on the positive and negative empirical spillover results of FDI on productivity of local firms. Up to a critical bound, the larger the initial technology gap between the foreign and home firms, the more the home firm spends to gain spillovers. Past that boundary, the home firm decreases spending. As a result, the home firm's profits from spillovers vary, but larger technology gaps engender greater net profit losses from FDI.
format	Journal Article
author	Sawada, Naotaka
author_facet	Sawada, Naotaka
author_sort	Sawada, Naotaka
title	Technology Gap Matters on Spillover
title_short	Technology Gap Matters on Spillover
title_full	Technology Gap Matters on Spillover
title_fullStr	Technology Gap Matters on Spillover
title_full_unstemmed	Technology Gap Matters on Spillover
title_sort	technology gap matters on spillover
publishDate	2012
url	http://hdl.handle.net/10986/4917
_version_	1764393235690553344

Technology Gap Matters on Spillover

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