Publication

This paper studies R&D spillovers as a motive for firms to go multinational with a focus on a firm’s ability to learn from foreign R&D activity. The paper models the concept of absorptive capacity where spillovers are endogenized as a function of the firm's own R&D investments using a three-stage Cournot duopoly model. The paper shows that with endogenous R&D investments only medium-sized absorptive capacity effects will result in firms going multinational and that higher spillover rates do not necessarily drive down R&D and profits for the multinational firm.