Why Industrial Policies Fail: Limited Commitment
AbstractGovernment policies designed to give domestic exporters a strategic advantage in world markets are completely effective only if the government can commit to those policies for as long as they affect firms' decisions. Export subsidies or other output policies that affect firms only in the current period could, it is true, be used strategically without long-term commitments, but international agreements or fears of retaliation limit their use. The shorter the period of a government's commitment to an investment or industrial policy that affects firms over many periods, the less its strategic value, because the government loses the "first mover" advantage it would have in a one-period market.
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Bibliographic InfoPaper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 450.
Date of creation: Aug 1990
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Other versions of this item:
- Karp, Larry & Perloff, Jeffrey M, 1993. "Why Industrial Policies Fail: Limited Commitment," Department of Agricultural & Resource Economics, UC Berkeley, Working Paper Series qt8ss076xw, Department of Agricultural & Resource Economics, UC Berkeley.
- E61 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Policy Objectives; Policy Designs and Consistency; Policy Coordination
- F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
- L52 - Industrial Organization - - Regulation and Industrial Policy - - - Industrial Policy; Sectoral Planning Methods
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