Unilateral R&D Subsidy and its Technology Spillover in International Trade

Under the condition of Unilateral R&D subsidies, this paper examines the relationship between the strategies of firm and technology spillover degree with unilateral R&D subsidies. It is turn out that when spillover degree escalate, output and profit of the domestic (foreign) firms increase (decrease) accordingly. Then if the spillover degree is relative lower, R&D subsidy is more beneficial to the firm taking technology innovation strategy than the firm with imitation strategy. If the spillover index is relative higher, the R&D subsidies promote the output and profit of the firms with either innovation or imitation strategy. (C) 2011 Published by American Applied Sciences Research Institute