Yours is bigger than mine! Could an index like the Producer Subsidy Equivalent help in understanding the comparative incidence of industrial subsidies?

Robert Wolfe

The World Economy, 2021, vol. 44, issue 2, 328-345

Abstract: State support remains a leading cause of tension in international commercial relations. Governments see trade distortions that look like they were caused by industrial subsidies, but lack data to illuminate that state support. In the 1980s, the Organisation for Economic Co‐operation and Development (OECD) developed an index that helped countries to see the overall incidence of agricultural subsidies, initially called the Producer Subsidy Equivalent (PSE) and the Consumer Subsidy Equivalent (CSE). Are there lessons for today in the PSE approach? I try to answer that question from the standpoint of economics: how did the PSE evolve, what is it, is the concept relevant to industrial subsidies? And of politics: how was OECD able to create the tool, and do present conditions permit something similar? The PSE was a response to a shared perception of crisis. It drew on well‐established concepts in the agricultural economics and trade literatures. And it works best in a context where market power is sufficiently diffuse that a price gap between domestic and world prices can be calculated. Only some of those conditions can be met when applying the approach to concentrated industries dominated by large firms that operate in multi‐country supply chains.

Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

Downloads: (external link)
https://doi.org/10.1111/twec.13069

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:bla:worlde:v:44:y:2021:i:2:p:328-345

Ordering information: This journal article can be ordered from
http://www.blackwell ... bs.asp?ref=0378-5920

Access Statistics for this article

The World Economy is currently edited by David Greenaway

More articles in The World Economy from Wiley Blackwell
Bibliographic data for series maintained by Wiley Content Delivery ().