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Can subsidies for MARs be procompetitive?

  • Kala Krishna
  • Suddhasatwa Roy
  • Marie Thursby

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.

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Article provided by Canadian Economics Association in its journal Canadian Journal of Economics.

Volume (Year): 34 (2001)
Issue (Month): 1 (February)
Pages: 212-224

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Handle: RePEc:cje:issued:v:34:y:2001:i:1:p:212-224
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  1. Ethier, Wilfred J & Horn, Henrik, 1996. "Results-Oriented Trade Policy," Review of International Economics, Wiley Blackwell, vol. 4(1), pages 17-39, February.
  2. Kala Krishna & Suddhasatwa Roy & Marie Thursby, 1997. "Procompetitive Market Access," NBER Working Papers 6184, National Bureau of Economic Research, Inc.
  3. Krishna, Kala & Morgan, John, 1998. "Implementing results-oriented trade policies: The case of the US-Japanese auto parts dispute," European Economic Review, Elsevier, vol. 42(8), pages 1443-1467, September.
  4. Thierry Verdier, 1998. "Results-oriented versus rules-oriented trade policies:: A theoretical survey," European Economic Review, Elsevier, vol. 42(3-5), pages 733-744, May.
  5. Kala Krishna & Suddhasatwa Roy & Marie Thursby, 1996. "Implementing Market Access," NBER Working Papers 5593, National Bureau of Economic Research, Inc.
    • Krishna, K & Roy, S & Thursby, M, 1996. "Implementaing Market Access," Papers 96-003, Purdue University, Krannert School of Management - Center for International Business Education and Research (CIBER).
    • Krishna, K & Thursby, M & Roy, S, 1996. "Implementing Market Access," Papers 96-011, Purdue University, Krannert School of Management - Center for International Business Education and Research (CIBER).
  6. Greaney, Theresa M., 1996. "Import now! An analysis of market-share voluntary import expansions (VIEs)," Journal of International Economics, Elsevier, vol. 40(1-2), pages 149-163, February.
  7. Douglas A. Irwin, 1994. "Trade Politics and the Semi-conductor Industry," University of Chicago - George G. Stigler Center for Study of Economy and State 92, Chicago - Center for Study of Economy and State.
  8. Douglas A. Irwin, 1996. "Trade Policies and the Semiconductor Industry," NBER Chapters, in: The Political Economy of American Trade Policy, pages 11-72 National Bureau of Economic Research, Inc.
  9. Douglas A. Irwin, 1994. "Managed Trade," Books, American Enterprise Institute, number 51697, 5.
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