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Equilibrium State Aid in Integrating Markets

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Author Info
Stephen Martin (Purdue University)
Paola Valbonesi (University of Padova)

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Abstract

We present a model of the impact of state aid on equilibrium market structure and on market performance in an integrating market when the process of integration is driven by consumer inertia. In a partial equilibrium model, it is an equilibrium for governments to grant state aid, even though this reduces common market welfare.

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File URL: http://www.bepress.com/cgi/viewcontent.cgi?article=1904&context=bejeap
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Publisher Info
Article provided by Berkeley Electronic Press in its journal The B.E. Journal of Economic Analysis & Policy.

Volume (Year): 8 (2008)
Issue (Month): 1 ()
Pages:
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Handle: RePEc:bpj:bejeap:v:8:y:2008:i:1:n:33

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Related research
Keywords: state aid; exit; market integration;

Other versions of this item:

Find related papers by JEL classification:
F15 - International Economics - - Trade - - - Economic Integration
L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
L53 - Industrial Organization - - Regulation and Industrial Policy - - - Enterprise Policy

Cited by:
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  1. Christoph Bertsch & Claudio Calcagno & Mark Le Quement, 2009. "State aid and tacit collusion," Economics Working Papers ECO2009/36, European University Institute. [Downloadable!]
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This page was last updated on 2009-12-20.

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