new economy and trad

new economy and trad

Import facilitation, government research and development, and market concentration

Document Type : Research Paper

Authors
Ali Mazyaki 1
Sina Ashouri 2
Javid bahrami 3
Somayeh Shahhosseini 4
1 Assistant Professor, Department of Business Economics, Allameh Tabataba'i University, Tehran, Iran
2 Ph.D. Candidate in Economics, Faculty Economics, Allameh Tabataba'i University, Tehran, Iran
3 Associate Professor, Department of Business Economics, Allameh Tabataba'i University, Tehran, Iran
4 Associate Professor Department of Business Economics, Allameh Tabataba'i University, Tehran, Iran
10.30465/jnet.2026.52668.2236
Abstract
The central aim of this research is to determine if public R&D can be redefined as an industrial policy tool to counterbalance the adverse effects of trade liberalization. To this end, we analyze the impact of trade facilitation and public R&D on market concentration using a panel of 21 countries from 2000 to 2014, combining data from De Loecker & Eeckhout (2018), Rubínová & Sebti (2021), and the OECD (2023). The analysis employs the markup index as the dependent variable, with the import-cost index, public R&D personnel (FTE), and their interaction term (capturing the "public-innovation feedback" channel) as key regressors. Estimates are reported using a two-way fixed effects model with Driscoll–Kraay standard errors to account for cross-sectional dependence, complemented by a random effects model for sensitivity analysis. The results demonstrate that incorporating the public-innovation feedback channel significantly modifies the estimated impact of trade facilitation. Specifically, public R&D investment is found to partially offset the rise in market concentration associated with Import facilitation. These findings suggest that a synergistic approach to trade and public innovation policy offers an effective strategy for preserving competition and curbing market power.
Keywords
Research and Development
Innovation
Market Concentration
Import Facilitation
Trade Liberalization
 
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  • Receive Date 13 September 2025
  • Revise Date 17 December 2025
  • Accept Date 17 January 2026