Working Paper No. 467

High-Technology Subsidies in General Equilibrium: A Sector-Specific Approach

Published: September 1996Pages: 27Keywords: PRODUCTION; RESEARCH AND DEVELOPMENT; PRODUCTIVITYJEL-codes: F11; F12

High-Technology Subsidies in General Equilibrium: A Sector-Specific Approach Karolina Ekholm and Johan Torstensson


We use a specific-factor model to examine the conditions under which policy-makers are able to increase aggregate production of high-tech goods by production or R&D-subsidies in the short and long run. The difficulties for the policy-makers in designing a subsidy scheme that succeeds in expanding aggregate high-tech production involve taking into account the trade-off between resources used in R&D and production of high-tech goods, the relative impact of different R&D activities on productivity, and the ease with which resources may be attracted from the non-high-tech sector of the economy to the various high-tech industries.

Interdisciplinary European Studies

The European Union in a Changing World Order

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This book explores how the European Union responds to the ongoing challenges to the liberal international order. These challenges arise both within the EU itself and beyond its borders, and put into question the values of free trade and liberal democracy. 

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