Export subsidies and the first-mover (dis)advantage

Piracha, Matloob (2011) Export subsidies and the first-mover (dis)advantage. Singapore Economic Review, 56 (1). pp. 41-50. ISSN 0217-5908. E-ISSN 1793-6837. (doi:https://doi.org/10.1142/S0217590811004080) (The full text of this publication is not currently available from this repository. You may be able to access a copy if URLs are provided)

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Official URL
http://dx.doi.org/10.1142/S0217590811004080

Abstract

In the presence of home firm's ability to make a cost-reducing investment before or after the government set its subsidy level, this paper analyzes the impact of timing on the optimal policy of the government. We find that under complete information assumption, the firm will overinvest and consequently, the government will over-subsidize, resulting in lower welfare levels than would arise under non-intervention. We extend the model to the case in which the home firm has private information about its own costs, which it may want to signal to the government through its investment choice. We find that under this setup, the low-cost firm overinvests even more than under full information case, making the policy of non-intervention even more attractive.

Item Type: Article
Uncontrolled keywords: Subsidies; investment; signaling
Subjects: H Social Sciences
Divisions: Faculties > Social Sciences > School of Economics
Depositing User: Matloob Piracha
Date Deposited: 05 Apr 2016 17:50 UTC
Last Modified: 06 Apr 2016 08:44 UTC
Resource URI: https://kar.kent.ac.uk/id/eprint/54798 (The current URI for this page, for reference purposes)
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