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The Number of Firms and the Politics of Export Subsidy

Author

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  • Koichi Kagitani

    (Research Institute for Economics & Business Administration (RIEB), Kobe University, Japan)

Abstract

The purpose of this paper is to present a framework to understand that the government's implementation of export subsidy is influenced by the political pressure from the home firms which can bear the costs of forming and maintaining a lobby in order to overcome a free-rider problem associated with lobbying. When the number of the foreign firms is large in comparison with that of the home firms, the home firms can organize a lobby group more easily and lobby for higher export subsidy. The implementation of politically optimal export subsidy can make the domestic social welfare far worse than when the free trade is maintained by a multilateral agreement which prohibit export subsidies.

Suggested Citation

  • Koichi Kagitani, 2003. "The Number of Firms and the Politics of Export Subsidy," Discussion Paper Series 135, Research Institute for Economics & Business Administration, Kobe University.
    • Handle: RePEc:kob:dpaper:135
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    File URL: https://www.rieb.kobe-u.ac.jp/academic/ra/dp/English/dp135.PDF
    File Function: First version, 2003
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    Cited by:

    1. Yasar, Mahmut, 2013. "Political Influence of Exporting and Import-Competing Firms: Evidence from Eastern European and Central Asian Countries," World Development, Elsevier, vol. 51(C), pages 154-168.

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