Cost asymmetries in international subsidy games: should governments help winners or losers?
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...Expand abstract
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- Peer reviewed
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- Elsevier Science BV
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- Professor Neary was affiliated to the Department of Economics, University College Dublin when this article was first published. The full-text of this article is not available in ORA at this time. Citation: Neary, J. P. (1994). 'Cost asymmetries in international subsidy games: Should governments help winners or losers?', Journal of International Economics, 37(3-4), 197-218. [Available at http://www.sciencedirect.com/science/journal/00221996].
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