Rent-Shifting Export Subsidies with an Imported Intermediate Product

Jota Ishikawa and Barbara Spencer

No 5458, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: This paper argues that export subsidies aimed at shifting rents from foreign to domestic producers of a final good may also serve to shift rents to foreign firms supplying an intermediate good, weakening the incentive for the subsidy. By contrast, assuming Cournot competition for both the final and intermediate goods, this second layer of rent-shifting between final and intermediate good firms can strengthen the argument for an export subsidy if intermediate good firms are domestic. The domestic welfare implications of alternative rent-shifting policies (a production subsidy and an import tariff) at the intermediate good stage are also considered.

JEL-codes: F12 F13 (search for similar items in EconPapers)
Date: 1996-02
Note: ITI
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

Published as Journal of International Economics, Vol. 48, no. 2 (August 1999): 199-232.

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Journal Article: Rent-shifting export subsidies with an imported intermediate product (1999)
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