Korea Trade Review (무역학회지)

Korea Trade Research Association (한국무역학회)
권호 표지
DOI QR코드

DOI QR Code

An Analysis of the Effects of Establishing Multilateral FTA on the R&D Investment of Exporting Firm

다자간 FTA의 형성이 역내 수출기업의 R&D 투자에 미치는 경제적 효과 분석

  • Park, Jae-Kwan (School of Economics & Trade, Kyungpook National University) ;
  • Kim, Hee-Ho (School of Economics & Trade, Kyungpook National University)
  • 박재관 (경북대학교 경제통상학부) ;
  • 김희호 (경북대학교 경제통상학부)
  • Received : 2019.06.09
  • Accepted : 2019.06.25
  • Published : 2019.06.30
Download PDF
⟨ Previous Next ⟩

Abstract

We compared and analyzed the effects of establishing multilateral FTA and bilateral FTA on the R&D investment of exporting firms when they compete in Cournot fashion and when the government of the importing country acts strategically. In the short run, we found that the importing country prefers to enter into a bilateral FTA with each exporting country separately for maximizing its welfare. However, we also found that, in the long run, it is more welfare-enhancing policy for importing country that entering into a multilateral FTA with all of the exporting countries simultaneously because it helps facilitate the R&D investment of exporting firms. But once entering into a multilateral FTA, the exporting firms would be faced with more intensive R&D investment competition and hence they would suffer severe welfare loss.

Keywords

References

  1. Bagwell, K., Staiger, R. W., (1999), "An economic theory of GATT". American Economic Review, 89, 215-248. https://doi.org/10.1257/aer.89.1.215
  2. Bodkin, R. G., and L. R. Klein (1967), "'Nonlinear estimation of aggregate production functions."' Review of Economic Studies, 34, 28-46
  3. Brander J. A. and B. J. Spencer (1985), "Export Subsidies and International Market Share Rivalry", Journal of International Economics, 18, 83-100. https://doi.org/10.1016/0022-1996(85)90006-6
  4. Brander, J. A., and B. J. Spencer (1984a), "Trade welfare: tariffs and cartels." Journal of International Economics, 16, 227-42 https://doi.org/10.1016/S0022-1996(84)80002-1
  5. Brander, J. A., and B. J. Spencer (1984b), "Tariff protection and imperfect competition." In H. Kierzkowski (Ed), Monopolistic Competition and International Trade, Oxford: Clarendon Press.
  6. Brander, J. A., Krugman, P. R., (1983), A "'reciprocal dumping' model of international trade", Journal of International Economics, 15, 313- 323. https://doi.org/10.1016/S0022-1996(83)80008-7
  7. Caplin, A. and Krishna, K., (1988), "Tariffs and the most favored nation clause: a game theoretic approach", Seoul Journal of Economics, 1, 267- 289.
  8. Choi, J. P. (1995), "Optimal tariffs and the choice of technology: discriminatory tariffs vs. the most favored nation clause", Journal of International Economics, 38, 143-160. https://doi.org/10.1016/0022-1996(94)01335-P
  9. Choi, J. Y., and E. S. H. Yu (1987), "Nominal and optimum tariffs under variable returns to scale", Oxford Economic Papers, 39, 785-798. https://doi.org/10.1093/oxfordjournals.oep.a041816
  10. Dixit, A. K. (1984), "International trade policy for oligopolistic industries", Economic Journal, 94, Supplement, 1-16. https://doi.org/10.2307/2232651
  11. Dixit, A. K. (1986), "Comparative statics for oligopoly", International Economic Review, 27, 107-122. https://doi.org/10.2307/2526609
  12. Dixit, A. K. (1988), "Anti-dumping and countervailing duties under oligopoly", European Economic Review, 32, 55-68. https://doi.org/10.1016/0014-2921(88)90034-7
  13. Eaton, J., and G. M. Grossman (1986), "Optimal trade and industrial policy under oligopoly", Quarterly Journal of Economics, 101, 383-406. https://doi.org/10.2307/1891121
  14. Ethier, W. J., (2000a). Unilateralism in a multilateral world, University of Pennsylvania, mimeo.
  15. Ethier, W. J., (2000b). Reciprocity, non-discrimination, in a multilateral world, University of Pennsylvania, mimeo.
  16. Fung, K.C. (1987). "Industry structure, antitrust and tariffs", International Journal of Industrial Organization, 5, 447-456. https://doi.org/10.1016/S0167-7187(87)80006-1
  17. Gatsios, K., (1990), "Preferential tariffs and the 'most favoured nation' principle: a note", Journal of International Economics, 28, 365-373. https://doi.org/10.1016/0022-1996(90)90009-B
  18. Hahn, F. (1962). "The stability of the Cournot oligopoly solution.", Review of Economic Studies, 32, 329-331 https://doi.org/10.2307/2296310
  19. Helpman, E., and P. R. Krugman (1989). Trade Policy and Market Structure, Cambridge, MA: MIT Press.
  20. Hoekman, B. M. and M. M. Kostecki, (2001). The Political Economy of the World Trading System, Oxford University Press, New York, NY.
  21. Horn, H., and P. C. Mavroidis, (2001), "Economic and legal aspects of the most-favored nation clause", European Journal of Political Economy, 17, 233-279. https://doi.org/10.1016/S0176-2680(01)00028-3
  22. Huh Yoon (2013), "The World Trade War III, TPP, FTA among Asian-Pacific 11-Countries, Match of US and China for attracting Korea", Chosen Ilbo, Mar27. (http://biz.chosun.com/site/data/html_dir/2013/03/26/2013032602542.html)
  23. Hwang H. and C. C. Mai, (1991). "Optimum discriminatory tariffs under oligopolistic competition.", Canadian Journal of Economics, 24, 693-702. https://doi.org/10.2307/135589
  24. Kim Byung-Yong (2013), "Rise of Economic-Bloc Type FTA", Financial News, Feb11. (http://www.fnnews.com/news/201302111146171462)
  25. Korea Institute for International Economic Policy(KIEP) (2012), "Recent Trends of Trade Protectionism and Countermeasure of Korea", World Economy Update, 12(19), Dec19.
  26. Korea Institute for International Economic Policy(KIEP) (2019), "The Meaning and Prospect of the Effectiveness of Africa Continental Free Trade Agreement(AfCFTA)", World Economy Focus, 7(12), May30.
  27. La Mee-Ryung (2017), "Regional Comprehensive Economic Partnership (RCEP): Progress and Challenges", World Economy Brief, Korea Institute for International Economic Policy(KIEP), 7(12), June12.
  28. Krishna, P.(1998). "Regionalism and multilateralism: a political economy approach", The Quarterly Journal of Economics, 113, 227-251. https://doi.org/10.1162/00335539851144162
  29. Liao, P. and K. Wong, (2006), "Uniform Versus Discriminatory Tariffs: When Will Export Taxes Be Used?", Southern Economic Journal, 72, 915-925. https://doi.org/10.2307/20111860
  30. Ludema, R., (1991). "International trade bargaining and the most-favored-nation clause", Economics and Politics, 3, 1-20. https://doi.org/10.1111/j.1468-0343.1991.tb00036.x
  31. Mai, C. C., and H. Hwang (1987), "Domestic export subsidy and foreign welfare", Economics Letters, 23, 185-188. https://doi.org/10.1016/0165-1765(87)90036-X
  32. McCalman, P. (2002)."Multi-lateral trade negotiations and the most favored nation clause", Journal of International Economics, 27, 151- 176. https://doi.org/10.1016/S0022-1996(01)00129-5
  33. Neary, J. P., (1994). "Cost asymmetries in international subsidy games: should governments help winners or losers?", Journal of International Economics, 37, 197-218. https://doi.org/10.1016/0022-1996(94)90045-0
  34. Ozerturk, S., Saggi, K., (2002), "Tariff discrimination versus MFN under incomplete information', Southern Methodist University, mimeo.
  35. Park Jae-Kwan (2015). "An Analysis of the Effects of Establishing Mega-Regional FTA on R&D Investment of Exporting Firms", KIEA Spring Conference 2015, Korean Industrial Economic Association(KIEA), May30, 21-40.
  36. Staiger, R. W., (1995)."International rules and institutions for trade policy", In: Grossman, G.M., Rogoff, K. (Eds.), The Handbook of International Economics, 3, Elsevier, Amsterdam.
  37. Venables, A.J. (1985)."Trade and trade policy with imperfect competition: the case of identical products and free entry", Journal of International Economics, 19, 1-19. https://doi.org/10.1016/0022-1996(85)90016-9