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Can subsidies for MARs be procompetitive?

Author

Listed:
  • Kala Krishna
  • Suddhasatwa Roy
  • Marie Thursby

Abstract

In contrast to recent literature, we show that market access requirements (MARs) can be implemented in a procompetitive manner even in the absence of threats in related markets. By focusing on subsidies that are paid only when the requirement is met, we show that a MAR can increase aggregate output relative to free trade provided that the right set of firms is targeted. In the context of a model with multiple Japanese and U.S. firms, we show that a MAR on U.S. imports is procompetitive as long as the U.S. firms are the ones targeted to receive the subsidy.

Suggested Citation

  • Kala Krishna & Suddhasatwa Roy & Marie Thursby, 2001. "Can subsidies for MARs be procompetitive?," Canadian Journal of Economics, Canadian Economics Association, vol. 34(1), pages 212-224, February.
    • Handle: RePEc:cje:issued:v:34:y:2001:i:1:p:212-224
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    Cited by:

    1. Qiu, Larry D. & Spencer, Barbara J., 2002. "Keiretsu and relationship-specific investment: implications for market-opening trade policy," Journal of International Economics, Elsevier, vol. 58(1), pages 49-79, October.
    2. Jan Bouckaert & Bruno De Borger, 2013. "Price competition between subsidized organizations," Journal of Economics, Springer, vol. 109(2), pages 117-145, June.

    More about this item

    JEL classification:

    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations

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