The Analytics of Export Promotion Policies Designed to Reduce Search Costs

Mark Herander ()
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Mark Herander: Department of Economics, University of South Florida

No 1213, Working Papers from University of South Florida, Department of Economics

Abstract: This study examines the economic effects of export subsidy policy in an environment where exporters must expend resources to find foreign consumers. Within a sequential search model we find that export promotion policies specifically designed to lower an exporter�s search costs (e.g., government-sponsored trade missions) have very different effects than non-targeted subsidies. For example, subsidies that lower search costs induce exporters to increase their price. However, this result is sensitive to model specification and may even be reversed when the analysis allows for foreign competition.

Keywords: Export subsidies; search (search for similar items in EconPapers)
JEL-codes: F12 F13 (search for similar items in EconPapers)
Pages: 31 pages
Date: 2013-03
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