The Failure of Strategic Industrial Policies Due to the Manipulation by Firms
AbstractThe strategic effects of subsidies on output and subsidies on investment differ substantially in dynamic models where a government's commitment ability is limited. Output subsidies remain effective even as the period of commitment vanishes, but investment subsidies may become completely ineffective. This difference has been obscured because most existing models of strategic trade policy are static.
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Bibliographic InfoPaper provided by Department of Agricultural & Resource Economics, UC Berkeley in its series Department of Agricultural & Resource Economics, UC Berkeley, Working Paper Series with number qt2tf2n8fq.
Date of creation: 01 Sep 1993
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Strategic trade policy; convex adjustment costs; Markov perfect equilibria;
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NBER Working Papers
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