type="main" xml:id="ecor12076-abs-0001" <p>This study establishes a third-country trade model where firms from developing and developed countries invest into product R&D under their governments' subsidisation policies to analyse firms' quality–price choices and governments' optimal product R&D...</p>

A simple three-stage game model of an international Cournot duopoly, consisting of domestic and foreign multinational firms, is exploited to examine strategic FDI subsidies. While in the first stage the governments decide the optimal FDI subsidies, the firms endogenously choose their FDI levels...