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

J. Peter Neary

No 147, Discussion Papers, Series II from University of Konstanz, Collaborative Research Centre (SFB) 178 "Internationalization of the Economy"

Abstract: This paper examines the optimality of export subsidies in oligopolistic markets, when home and foreign fires have different costs and there is an opportunity cost to public funds. Subsidies are found to be optimal only for surprisingly lou 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: Strategic Trade Policy; Export Subsidies; Industrial Policy; Cournot and Bertrand Competition (search for similar items in EconPapers)
Date: 1991
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Citations: View citations in EconPapers (1)

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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)
Working Paper: Cost asymmetries in international subsidy games: should governments help winners or losers? (1990)
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