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The Analytics of Export Promotion Policies Designed to Reduce Search Costs

Author

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  • Mark Herander

    (Department of Economics, University of South Florida)

Abstract

This study examines the economic effects of export subsidy policy in an environment where exporters must expend resources to find foreign consumers. Within a sequential search model we find that export promotion policies specifically designed to lower an exporter�s search costs (e.g., government-sponsored trade missions) have very different effects than non-targeted subsidies. For example, subsidies that lower search costs induce exporters to increase their price. However, this result is sensitive to model specification and may even be reversed when the analysis allows for foreign competition.

Suggested Citation

  • Mark Herander, 2013. "The Analytics of Export Promotion Policies Designed to Reduce Search Costs," Working Papers 1213, University of South Florida, Department of Economics.
    • Handle: RePEc:usf:wpaper:1213
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    File URL: https://www.usf.edu/arts-sciences/departments/economics/documents/HeranderExportPromotionPolicies.pdf
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    More about this item

    Keywords

    Export subsidies; search;

    JEL classification:

    • F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations

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