Robust Rules for Industrial Policy in Open Economies.
The theory of strategic trade policy yields ambiguous recommendations for assistance to exporting firms in oligopolistic industries. However, some writers have suggested that investment subsidies are a more robust recommendation than export subsidies. We show that, although ambiguous in principle, t...
| Main Authors: | , |
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| Format: | Journal article |
| Language: | English |
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2001
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| _version_ | 1797073896022736896 |
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| author | Leahy, D Neary, J |
| author_facet | Leahy, D Neary, J |
| author_sort | Leahy, D |
| collection | OXFORD |
| description | The theory of strategic trade policy yields ambiguous recommendations for assistance to exporting firms in oligopolistic industries. However, some writers have suggested that investment subsidies are a more robust recommendation than export subsidies. We show that, although 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 cost-reducing or market-expanding investment, and with or without spillovers. Only if firms have strong asymmetries in their investment behaviour and engage in Bertrand competition is an investment tax clearly justified. |
| first_indexed | 2024-03-06T23:28:31Z |
| format | Journal article |
| id | oxford-uuid:6b3a5acb-99b8-4b36-b6d2-e37852122b66 |
| institution | University of Oxford |
| language | English |
| last_indexed | 2024-03-06T23:28:31Z |
| publishDate | 2001 |
| record_format | dspace |
| spelling | oxford-uuid:6b3a5acb-99b8-4b36-b6d2-e37852122b662022-03-26T19:02:31ZRobust Rules for Industrial Policy in Open Economies.Journal articlehttp://purl.org/coar/resource_type/c_dcae04bcuuid:6b3a5acb-99b8-4b36-b6d2-e37852122b66EnglishDepartment of Economics - ePrints2001Leahy, DNeary, JThe theory of strategic trade policy yields ambiguous recommendations for assistance to exporting firms in oligopolistic industries. However, some writers have suggested that investment subsidies are a more robust recommendation than export subsidies. We show that, although 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 cost-reducing or market-expanding investment, and with or without spillovers. Only if firms have strong asymmetries in their investment behaviour and engage in Bertrand competition is an investment tax clearly justified. |
| spellingShingle | Leahy, D Neary, J Robust Rules for Industrial Policy in Open Economies. |
| title | Robust Rules for Industrial Policy in Open Economies. |
| title_full | Robust Rules for Industrial Policy in Open Economies. |
| title_fullStr | Robust Rules for Industrial Policy in Open Economies. |
| title_full_unstemmed | Robust Rules for Industrial Policy in Open Economies. |
| title_short | Robust Rules for Industrial Policy in Open Economies. |
| title_sort | robust rules for industrial policy in open economies |
| work_keys_str_mv | AT leahyd robustrulesforindustrialpolicyinopeneconomies AT nearyj robustrulesforindustrialpolicyinopeneconomies |