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

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Title: Cost asymmetries in international subsidy games : should governments help winners or losers?
Authors: Neary, J. Peter
Permanent link: http://hdl.handle.net/10197/1477
Date: 28-Dec-1990
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.
Type of material: Working Paper
Publisher: University College Dublin. School of Economics
Subject LCSH: Export subsidies--Econometric models
Oligopolies
Competition
Language: en
Status of Item: Not peer reviewed
Appears in Collections:Economics Working Papers & Policy Papers

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