Tarun Kabiraj

Protecting consumers through protection: The role of tariff-induced technology transfer

Abstract We consider a duopolistic trade model where a tariff induces the foreign firm to transfer its superior technology to the domestic rival. Contrary to the conventional wisdom, such a tariff raises consumers’ surplus relative to the free trade situation. We characterize the optimal tariff with and without precommitment on the part of the local government. Possibility of technology transfer reduces the optimal tariff rate compared to the no-transfer situation.

International technology transfer under potential threat of entry: A Cournot-Nash framework☆

Abstract This paper analyses the possibility of technology transfer from a technologically advanced foreign firm to a domestic firm of a less-developed country when the product market is characterized by Cournot-Nash competition. The foreign firm is not allowed to enter the home market by a prohibitive tariff but the backward firm may not face any such resistance in the foreign markets. This means that technology transfer, under this situation, involves potential threat of competition from the latecomer. It is shown that by designing a suitable payment policy the host-country government can induce the foreign firm to transfer the ‘best’ technology. However, there are possible equilibria where ‘worse-than-the-best’ technologies are transferred.

Cooperation in R&D and production : a three firm analysis

The paper analyzes, in a model of quantity-setting three firms, the interaction between cooperation decisions at the R&D stage and merger decisions at the production stage. We assume that only two of the three firms are capable of doing cost-reducing research. Two types of cooperative research, viz., the knowledge-sharing agreement and research joint venture are considered. Cost reduction in the case of a successful research joint venture is larger compared to knowledge sharing or independent research, due to possible synergies. We show that allowing mergers can change the organization of the R&D process, and admitting cooperative research can affect the occurrence and nature of mergers at the production stage.

On the welfare analysis of a cross-border merger

We provide a comparative welfare analysis of domestic and cross-national mergers. We focus, in particular, on the importance of possible synergies in mergers, the existing market structure and the bargaining power of the merging firms (in the case of a cross-border merger).

Bilateral Agreements in a MultiFirm Industry: Technology Transfer and Horizontal Merger

The paper studies the profitability of technology transfer and horizontal merger between two asymmetric firms in a multifirm Cournot oligopoly. If there is only one technologically advanced firm and one or many technologically backward firm(s), a profitable technology deal between two asymmetric firms exists if and only if the collaborating firms are “close” in terms of their initial technology levels. With more than one advanced firm such a technology deal is “always” profitable. Contrary to that, a profitable bilateral horizontal merger occurs if and only if the gap of technologies between the two partners is larger than a critical level. The paper also studies the relative profitability of these two bilateral arrangements.

Technology transfer in duopoly The role of cost asymmetry

Abstract This article examines the possibility of a profitable technology transfer deal in a duopoly. We show that under a fixed fee contract, technology transfer will be always profitable if the products are sufficiently differentiated or the firms behave sufficiently cooperatively or both. Under a profit sharing contract, however, a profitable technology transfer deal always exists even in a market characterised by Cournot duopoly with homogeneous goods.

Technology and price in a non-cooperative framework

Abstract We consider a Cournot-Nash model to argue that lowering of cost of production for a particular producer might lead to an increase in the price of the commodity. This result has implications for patentship of innovations and technology licensing policies.

Synergy, learning and the changing industrial structure

In a set-up of two local firms and one foreign firm, we construct a model to capture the dynamics of local industrial structure induced by formation and breakdown of cross-border joint ventures (JVs). There is a synergic gain to the JV, and the partners learn from each other. Firms play a repeated game. We characterize the resulting industrial configurations under different scenarios as defined by the extent of cost saving. In particular, we show that when cost saving is moderate, an alliance formed between two firms in the first period, breaks up and a new alliance is formed in the second period, but again it breaks up; thereafter the market becomes an oligopoly of all three firms.

Tariffs versus licensing in the presence of fixed costs

In this paper we discuss welfare implications of alternative policies, namely zero tariff (free trade), prohibitive tariff (autarky), partial tariff and licensing, from the host countrys point of view. Licensing always dominates autarky and free-trade equilibrium. However, the choice between licensing and partial protection under the optimal tariff policy largely depends on the size of the fixed costs involved in production and on the technological differences between foreign and domestic firms.

Income distribution and the contractionary effect of protection: A theoretical analysis

In terms of a simple model we show that removal of tariff from a competing foreign brand is likely to expand the size of the domestic industry when income disparities exist. A tariff increases profits of the local monopolist but is capable of cutting down the size of the local industry. After providing the general theoretical condition, we construct an example (from a class of examples) where such an outcome holds in equilibrium.