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activities are strategic APEC comparative static matrix cooperate to set corner solution country is loosely differentiating the first-order domestic firm effects of IPR enforcing IPR protection export subsidies exporting countries cooperate first-order conditions foreign R&D activities free rider problem given as follows Gz.z home and foreign impose a tax incentive to free incentive to invest incentive to subsidize inventive firms invest in R&D IPR policy IPR protection enforcement KIEP Korea loosely enforcing IPR marginal cost Nash equilibrium northern optimal R&D subsidies Patent Infringement positive externalities profits Protection and Strategic protection enforcement level R&D and export R&D levels R&D policies R&D reaction curve R&D subsidy rate rival's R&D outcome SB model second-order condition Seocho-Gu set strategic trade southern country Spencer and Brander static matrix equation strategic R&D subsidies strategic trade policy subsidies and IPR subsidize R&D activities Totally differentiating trade policy mix weak IPR protection Yunjong Wang