Research On Quantitative Model Construction For Strategic R&D Subsidy Policy Effects

It has been almost 25 years since the concept of strategic trade policy was brought forward by Spencer and Brander in 1981. During this period, great progress has been made in the theoretical research on strategic trade policy;on the contrary, its empirical research is comparatively destitute because of the complexity in policy quantization. What's more, almost all the empirical research on strategic trade policy focuses on the "Profit Shifting" theory, as for the other part of strategic trade policy—"Externalities" theory, empirical study is almost blank. This paper attempts to construct a quantitative model to quantify the effects of implementing the strategic R&D subsidy policy by dint of the methods--calibration and conjectural variation, and in turn, carry out the empirical research on strategic R&D subsidy policy.The specific empirical research is based on China's automobile export. Generally speaking, there are two reasons why this paper chooses China's automobile industry as the research object. First, China's automobile industry is facing great challenge because of the fulfillment of the promises that Chinese government made with WTO, thus it desiderates effective and right trade policy to support and encourage the development of China's automobile industry;second, the implementation of the strategic R&D subsidy policy on China's automobile industry will effectively accelerate the development of the whole secondary industry, and in turn, stimulate the national welfare.The specific empirical research is carried out as follows: first, the applicability of the strategic R&D subsidy policy to China's automobile industry should be affirmed;second, the effects caused by different levels of strategic R&D subsidy the Chinese government takes will be quantified, and afterward, compared;consequently, the conclusion will be summarized:(1) The quantitative model for strategic R&D subsidy policy this paper constructed is validate and plausible in the empirical field. The coherence between the empirical results and the theoretical expectancy strongly supports this conclusion.(2) The profit shifting effects that caused by the strategic R&D subsidy policy can effectively support the subsidized industry to improve its international competitiveness, and in turn, stimulate its national welfare.(3) The current strategic R&D subsidy level of the Chinese government is comparatively low. There is an obvious gap between the optimal strategic R&D subsidy level and the currentstrategic R&D subsidy level, therefore, there is enough room for the Chinese government to improve its automobile industry's international competitiveness and national welfare.