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ISRN Economics
Volume 2012 (2012), Article ID 702974, 8 pages
http://dx.doi.org/10.5402/2012/702974
Research Article

Outsourcing Innovation in Product Cycles

Department of Economics, National Tsing Hua University, 101 Section 2, Kuang-Fu Road, Hsinchu 30013, Taiwan

Received 4 June 2012; Accepted 22 August 2012

Academic Editors: T. Kuosmanen, A. Watts, and J. Zarnikau

Copyright © 2012 Hsiao-Lei Chu. This is an open access article distributed under the Creative Commons Attribution License, which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited.

Abstract

In this quality-ladder product-cycles model, a southern firm can undertake innovation by collaborating with a northern firm through R&D outsourcing. Generally, I find that the initial steady-state scale of R&D outsourcing and the fraction of innovative tasks undertaken by southern labor through R&D outsourcing critically affect the results of comparative statics. Particularly, the friendly policy to promote R&D outsourcing may be beneficial for both of the North and the South only if the scale of R&D outsourcing is small.