Endogenous Export Subsidies and Welfare under Domestic Cost Heterogeneity
Abstract
We present a model of international market share rivalry where the domestic export subsidy is determined by lobbying. Greater domestic cost heterogeneity leads to a higher subsidy level and a larger domestic market share. However, the relationship between cost heterogeneity and welfare is ambiguous. Starting from a near-symmetric situation, an increase in heterogeneity reduces domestic welfare if the number of domestic firms exceeds some critical value. when starting farther from symmetry, the welfare effect is reversed. Our findings are in contrast with the results from the existing literature where lobbying is ignored
Recommended Citation
Bandyopadhyay, S., Park, E. S., & Wall, H. J. (2004). Endogenous Export Subsidies and Welfare under Domestic Cost Heterogeneity. Economics and Politics, 16(3), pp. 347-366. Wiley-Blackwell.
The definitive version is available at https://doi.org/10.1111/j.1468-0343.2004.00143.x
Department(s)
Economics
Keywords and Phrases
Market share
International Standard Serial Number (ISSN)
0954-1985; 1468-0343
Document Type
Article - Journal
Document Version
Citation
File Type
text
Language(s)
English
Rights
© 2004 Wiley-Blackwell, All rights reserved.
Publication Date
01 Oct 2004
