The silver lining of red tape

Ronald Davies

Journal of Public Economics, 2013, vol. 101, issue C, 68-76

Abstract: An increasing number of international agreements require “non-discrimination” from their participants, i.e. the government of one country cannot treat foreign firms differently from domestic firms. This is at odds with a government's desire to benefit its own citizens rather than foreign citizens. I show that the use of red tape – a wasteful application process – can achieve de-facto discrimination. Key to this result is firm heterogeneity since, although the red tape cost is the same across firms, only those sufficiently benefiting from an incentive program will find it worth the cost of applying. If the benefits of targeting subsidies outweigh the burden of red tape, red tape will be used.

Keywords: Red tape; Export subsidies; Discrimination (search for similar items in EconPapers)
JEL-codes: F1 H2 (search for similar items in EconPapers)
Date: 2013
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

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Related works:
Working Paper: The Silver Lining of Red Tape (2010)
Working Paper: The silver lining of red tape (2010)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:pubeco:v:101:y:2013:i:c:p:68-76

DOI: 10.1016/j.jpubeco.2013.02.011

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