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The Relationship among Cost-Reducing R&D Investment, Occupational Choice, and Trade

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In this paper, I construct a two-country model in which oligopolistic firms export goods and undertake cost-reducing R&D investment. In this model, abilities of individual to become skilled worker are heterogeneous and they choose to become skilled worker or unskilled worker. Individuals have to incur the cost of education in order to become skilled workers. Each country imposes tariffs. When the cost of education is sufficiently high, a decrease in the tariff rate decreases the level of R&D investment. However, when the cost of education is sufficiently small, a decrease in the tariff rate increases the level of R&D investment.
Cite this paper
Morita, T. (2014) The Relationship among Cost-Reducing R&D Investment, Occupational Choice, and Trade. Theoretical Economics Letters, 4, 875-888. doi: 10.4236/tel.2014.49111. 
 

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