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Targeted and Global Export Subsidies and Welfare Impacts

Author

Listed:
  • Bohman, Mary
  • Carter, Colin A.
  • Dorfman, Jeffrey H.

Abstract

A three-country model of export subsidies is developed with an exporter, an importer, and a third country, representing the rest of the world, that can act on either side of the market. The welfare effect of an export subsidy targeted toward one importing country is shown to depend on whether the third country is an exporter or an importer, the market shares, and demand elasticities. The possibility of the paradoxical result that the targeted country can lose welfare as a result of receiving a subsidy is demonstrated to exist, and conditions are derived that determine when this result occurs. It is also demonstrated that when the rest of the world is a net exporter, a country offering a targeted export subsidy will suffer a welfare loss, while either its export competitors or the targeted country gains, but not both simultaneously.

Suggested Citation

  • Bohman, Mary & Carter, Colin A. & Dorfman, Jeffrey H., 1988. "Targeted and Global Export Subsidies and Welfare Impacts," Working Papers 51251, International Agricultural Trade Research Consortium.
  • Handle: RePEc:ags:iatrwp:51251
    DOI: 10.22004/ag.econ.51251
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    File URL: https://ageconsearch.umn.edu/record/51251/files/88-7.pdf
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    Cited by:

    1. Seitzinger, Ann Hillberg & Paarlberg, Philip L., 1989. "A Survey of Theoretical and Empirical Literature Related to Export Assistance," Staff Reports 278240, United States Department of Agriculture, Economic Research Service.

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    Keywords

    International Relations/Trade;

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