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The State Aid Game

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  • Stephen Martin

    ()
    (Purdue University)

  • Paola Valbonesi

    ()
    (University of Padua)

Abstract

We present a model of the impact of state aid on equilibrium market structure and on market performance in an integrating market when the process of integration is driven by consumer inertia. In a partial equilibrium model, it is an equilibrium for governments to grant state aid, even though this reduces common market welfare.

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File URL: http://economia.unipd.it/sites/decon.unipd.it/files/20060024.pdf
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Bibliographic Info

Paper provided by Dipartimento di Scienze Economiche "Marco Fanno" in its series "Marco Fanno" Working Papers with number 0024.

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Length: 37 pages
Date of creation: Jul 2006
Date of revision:
Handle: RePEc:pad:wpaper:0024

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Keywords: state aid; exit; market integration;

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  1. Nickell, S.J., 1993. "Competition and Crporate Performance," Economics Series Working Papers 99155, University of Oxford, Department of Economics.
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