Capital subsidies and countervailing duties in oligopolistic industries
AbstractUnder GATT, countries are allowed to impose countervailing duties to offset foreign subsidies. However GATT rules limit the amount of duty to the amount of the subsidy. This paper examines a generalized model of imperfect competition with capital subsidies and shows the conditions under which a countervailing duty will offset the effect of the subsidy on exports. Also, conditions are specified under which exports will increase despite the imposition of the maximum tariff under GATT. In addition, the paper considers whether profit shifting motives for a subsidy still exist even when this maximum duty is anticipated.
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Bibliographic InfoArticle provided by Elsevier in its journal Journal of International Economics.
Volume (Year): 25 (1988)
Issue (Month): 1-2 (August)
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Web page: http://www.elsevier.com/locate/inca/505552
Other versions of this item:
- Barbara J. Spencer, 1988. "Capital Subsidies and Countervailing Duties in Oligopolistic Industries," NBER Working Papers 2519, National Bureau of Economic Research, Inc.
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