Import-Subsidy Coordination and the Gains from International Diffusion Of Differentiated Middle Products
This paper shows that under reasonable parameter values it is independently rational for an importing country to impose a tariff on differentiated middle products, which are invented by monopolists worldwide in the high-technology sector. But to realize mutual gains, countries must use import subsidies in a cooperative manner. To dictate policy coordination, the paper computes the bilaterally coordinated subsidy bands under different sets of parameter values, reflecting monopoly power, spending share, and supply elasticities. [F12, F13]
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Volume (Year): 12 (1998)
Issue (Month): 2 ()
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