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

Abstract:

I consider the optimality of export subsidies in oligopolistic markets, when home and foreign firms have different costs and the social cost of public funds exceeds unity. Subsidies are optimal only for surprisingly low values of the social cost of public funds and, if subsidies are justified, they should be higher the more cost competitive are domestic firms. These results hold under both Cournot and Bertrand competition and in a two-period perfect equilibrium with learning by doing. The res...

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Publication status:
Published
Peer review status:
Peer reviewed

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Institution:
University of Oxford
Research group:
Industrial Economics
Oxford college:
Merton College
Department:
Social Sciences Division - Economics
Role:
Author
Publisher:
Elsevier Publisher's website
Journal:
Journal of International Economics Journal website
Volume:
37
Issue:
3/4
Pages:
197-218
Publication date:
1994-11-05
DOI:
ISSN:
0022-1996
URN:
uuid:5e5c7751-b19d-4d69-89fe-56c760b34370
Local pid:
ora:2151

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