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 InfoPaper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 2519.
Date of creation: Feb 1988
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Publication status: published as Spencer, Barbara J. "Capital Subsidies and Countervailing Duties in Oligopolistic Industries," Journal of International Economics, vol. 25, no. 1/2, pp 217-234. August 1988.
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- Spencer, Barbara J., 1988. "Capital subsidies and countervailing duties in oligopolistic industries," Journal of International Economics, Elsevier, vol. 25(1-2), pages 45-69, August.
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