The State Aid Game

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The State Aid Game

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Stephen Martin () (Purdue University)
Paola Valbonesi () (University of Padua)

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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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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
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Handle: RePEc:pad:wpaper:0024

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Find related papers by JEL classification:
F15 - International Economics - - Trade - - - Economic Integration
L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
L53 - Industrial Organization - - Regulation and Industrial Policy - - - Enterprise Policy

This paper has been announced in the following NEP Reports:

NEP-ALL-2006-08-26 (All new papers)

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