Innovation plays a key role in economic growth. In this paper, we investigate the effects of intermediate input tariff reduction on the innovation activities of domestic firms. Input tariff reduction has two opposite effects on the innovation decision of a firm: it may promote innovation because...

Governments in more developed economies partially compensate import-competing industries when world prices fall, i.e. they lean against the wind. In less developed economies we often observe liberalization in response to the same shock. We use a political-support maximization model with revenue...