Implementing Market Access
This paper examines ex post subsidies as a means of enforcing market share targets. Subsidies set after firms make their strategic decisions are shown to create powerful incentives for firms to raise prices. These effects are stronger when targets, and hence subsidies, are specified on a firm-specific rather than industry-wide basis. This occurs because firms perceive themselves as subject to more competition (i.e., more elastic demand) in the latter case. Copyright 1998 by Blackwell Publishing Ltd.
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Volume (Year): 6 (1998)
Issue (Month): 4 (November)
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