Cost asymmetries in international subsidy games: should governments help winners or losers?

J. Peter Neary

No 199008, Working Papers from School of Economics, University College Dublin

Abstract: This paper examines the optimality of export subsidies in oligopolistic markets, when home and foreign firms have different costs and there is an opportunity cost to public funds. Subsidies are found to be optimal only for surprisingly low values of the shadow price of government funds, and if subsidies are justified they should be higher the more cost-competitive are domestic firms. These results hold under both Cournot competition and Bertrand competition when firms move before governments. The results suggest that recent arguments for export subsidies apply only for firms that would be highly profitable even without subsidies.

Keywords: Export subsidies--Econometric models; Oligopolies; Competition (search for similar items in EconPapers)
Date: 1990-12
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http://hdl.handle.net/10197/1477 First version, 1990 (application/pdf)

Related works:
Journal Article: Cost asymmetries in international subsidy games: Should governments help winners or losers? (1994)
Working Paper: Cost Asymmetries in International Subsidy Games: Should Governments Help Winners or Losers? (1991)
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Persistent link: https://EconPapers.repec.org/RePEc:ucn:wpaper:199008

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