Robust Rules for Industrial Policy in Open Economies.

Working paper

The theory of strategic trade policy yields ambiguous recommendations for assistance to exporting firms in oligopolistic industries. Some writers have, however, suggested that investment subsidies are a more robust recommendation than export subsidies. We show that, though ambiguous in principle, the case for investment subsidies is reasonably robust in practice. Except when functional forms exhibit arbitrary non-linearities, it holds under both Cournot and Bertrand competition, with either c...

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Authors: Leahy, D; Neary, J

• Publisher: CEPR
• Host title: C.E.P.R.Discussion Papers
• Series: C.E.P.R.Discussion Papers
• Volume: 2731
• Publication date: 2001-01-01
• Paper number: 2731
• Language: English