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Protectionism through exporting: subsidies with export share requirements in China

Listed author(s):
  • Fabrice Defever
  • Alejandro Riaño

We study the effect of subsidies subject to export share requirements (ESR) - that is, conditioned on a firm exporting at least a given fraction of its output - on exports, the intensity of competition and welfare, through the lens of a two-country model of trade with heterogeneous firms. Our calibrated model suggests that this type of subsidy boosts exports more and provides greater protection for domestic firms than a standard unconditional export subsidy, albeit at a substantial welfare cost.

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File URL: http://eprints.lse.ac.uk/67659/
File Function: Open access version.
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Paper provided by London School of Economics and Political Science, LSE Library in its series LSE Research Online Documents on Economics with number 67659.

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Length: 38 pages
Date of creation: May 2016
Handle: RePEc:ehl:lserod:67659
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