Asset Specificity and the Demand for Subsidies

Nikolaos Zahariadis

Chapter Chapter 4 in State Subsidies in the Global Economy, 2008, pp 59-78 from Palgrave Macmillan

Abstract: Abstract Having shown the effects of globalization on subsidization efforts, I now turn my focus to the domestic policy process. While exposure to global economic forces has an important independent impact on subsidies, the effects are also filtered through domestic groups. Asset specificity, that is, the relative cost of moving productive assets across industries, has important implications for subsidies. The degree of asset specificity shapes the preferences of social actors for more protection (or not) through political coalitions and lobbying. Asset specificity among producer groups is then linked to their ability to demand more subsidies. Equally importantly, globalization shapes actor investments in more specific (or not) assets. The effects of asset specificity are therefore likely to vary in intensity depending on the level of exposure to global markets. Globalization has important independent and interactive effects.

Keywords: Total Factor Productivity; Wage Differential; Capital Mobility; Asset Owner; Productive Asset (search for similar items in EconPapers)
Date: 2008
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Persistent link: https://EconPapers.repec.org/RePEc:pal:palchp:978-0-230-61051-4_4

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DOI: 10.1057/9780230610514_4

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