Cost asymmetries in international subsidy games : should governments help winners or losers?
28 December 1990
05T13:55:35Z October 2009
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.
A hard copy is available in UCD Library at GEN 330.08 IR/UNI
Type of Material
University College Dublin. School of Economics
UCD Centre for Economic Research Working Paper Series
Subject – LCSH
Export subsidies--Econometric models
Status of Item
Not peer reviewed
This item is made available under a Creative Commons License