A welfare-theoretic argument for regional subsidization of industry in the presence of inferior technology

Mark Herander

Open Economies Review, 1995, vol. 6, issue 3, 255-263

Abstract: This paper develops a welfare-theoretic argument for regional policy makers to subsidize an industry that has access to superior production technology in another region. The analytical framework is based on a standard general equilibrium model where two regions operating within a federal system are connected by goods trade and capital mobility. Optimal regional policy is designed to improve the capital terms of trade and depends on regional production patterns. Only when the technologically deficient region is diversified in production will optimal policy involve subsidization of an industry that has access to superior technology in another region. Copyright Kluwer Academic Publishers 1995

Keywords: regionalism; commercial policy; welfare; capital mobility (search for similar items in EconPapers)
Date: 1995
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
http://hdl.handle.net/10.1007/BF01000084 (text/html)
Access to full text is restricted to subscribers.

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:kap:openec:v:6:y:1995:i:3:p:255-263

Ordering information: This journal article can be ordered from
http://www.springer. ... cs/journal/11079/PS2

DOI: 10.1007/BF01000084

Access Statistics for this article

Open Economies Review is currently edited by G.S. Tavlas

More articles in Open Economies Review from Springer
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().