The Failure of Strategic Industrial Policies Due to the Manipulation by Firms

Larry Karp and Jeffrey Perloff

Department of Agricultural & Resource Economics, UC Berkeley, Working Paper Series from Department of Agricultural & Resource Economics, UC Berkeley

Abstract: The strategic effects of subsidies on output and subsidies on investment differ substantially in dynamic models where a government's commitment ability is limited. Output subsidies remain effective even as the period of commitment vanishes, but investment subsidies may become completely ineffective. This difference has been obscured because most existing models of strategic trade policy are static.

Keywords: Strategic trade policy; convex adjustment costs; Markov perfect equilibria (search for similar items in EconPapers)
Date: 1993-09-01
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Related works:
Journal Article: The failure of strategic industrial policies due to manipulation by firms (1995)
Working Paper: The Failure of Strategic Industrial Policies Due to the Manipulation by Firms (1993)
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Persistent link: https://EconPapers.repec.org/RePEc:cdl:agrebk:qt2tf2n8fq

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