Industry Structure and Optimal Discriminatory Commercial Policies
This paper studies the optimal production subsidies for domestic firms that compete in an export market against each other as well as against foreign rivals. Assuming that all firms do not have identical cost curves, it shows that the optimal policy for the home government is to give the more efficient domestic firms higher rates of subsidy, and that it may be optimal to tax the less efficient domestic firms. Then it considers the optimal discriminatory tariffs on homogeneous goods that are imported from different countries.
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|Date of creation:||1996|
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