Opportunity cost, trade policies and the efficiency of firms.
The implications of trade policies on the technological effort of a firm entering a new market in the context of a developing country are examined by focusing on the opportunity cost of the effort. It is argued that a firm that allocates more time to the acquisition of more efficient technology del...
| Publicado en: | Journal of Development Economics Vol. 62; no. 2; pp. 363 - 384 |
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| Autor principal: | |
| Formato: | Artículo |
| Publicado: |
Elsevier Science
August 2000
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| Acceso en línea: | Ver este registro en EBSCOhost |
| Sumario: | The implications of trade policies on the technological effort of a firm entering a new market in the context of a developing country are examined by focusing on the opportunity cost of the effort. It is argued that a firm that allocates more time to the acquisition of more efficient technology delays the commercialization of its products, which incurs an opportunity cost in terms of profits foregone. It is indicated that protection leads to the increase of both the opportunity cost and the benefits from technological effort, and it is also shown to unambiguously reduce the protected firm's technological effort in terms of linear demand function and constant returns to scale technology. It is shown that export subsidy decreases technological effort when the potential level of exports under free trade is high. |
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