Abstract Using the vertical differentiation model modified by Hotelling model, this paper analyzed the optimal import strategy for Chinese network externality industries. According to the analysis, some suggestions were given as below. Firstly, if the technological gap between the local technology and foreign ones is absolutely large, the government should prompt the local potential entrant to import the highestquality foreign technology with low product compatibility. Secondly, if the technological gap between the local technology and foreign ones is absolutely small, to forbid the technology import is reasonable. Thirdly, the government should take some factors into account, such as quality gap, compatibility, charge rate of international licensing, and technology spillovers. Above all, some political proposals were given.
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Received: 20 February 2008
Published: 28 November 2008
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Corresponding Authors:
LIU Zhan
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