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Can Subsidies for MARs be Procompetitive

Author

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  • Krishna, K.
  • Roy, S.
  • Thursby, M.

Abstract

We show that a market access requirement (MAR) can increase competition and reduces prices if a properly designed subsidy scheme is used to enforce the requirement. This is in contrast to most of the recent literature which has generally concluded that MARs are unambiguously anticompetitive. Our analysis underscores the importance of proper targeting and shows that it is sensitive to the composition of firms within an industry.

Suggested Citation

  • Krishna, K. & Roy, S. & Thursby, M., 1998. "Can Subsidies for MARs be Procompetitive," Papers 98-008, Purdue University, Krannert School of Management - Center for International Business Education and Research (CIBER).
  • Handle: RePEc:fth:purkib:98-008
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    References listed on IDEAS

    as
    1. 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.
    2. Krishna, Kala & Roy, Suddhasatwa & Thursby, Marie, 1998. "Implementing Market Access," Review of International Economics, Wiley Blackwell, vol. 6(4), pages 529-544, November.
      • 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).
    3. Kala Krishna & Suddhasatwa Roy & Marie Thursby, 1997. "Procompetitive Market Access," NBER Working Papers 6184, National Bureau of Economic Research, Inc.
      • Thursby, M. & Krisna, K. & Roy, S., 1997. "Procompetitive Market Access," Papers 97-006, Purdue University, Krannert School of Management - Center for International Business Education and Research (CIBER).
    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. 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.
    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. Ethier, Wilfred J & Horn, Henrik, 1996. "Results-Oriented Trade Policy," Review of International Economics, Wiley Blackwell, vol. 4(1), pages 17-39, February.
    8. Douglas A. Irwin, 1994. "Managed Trade: The Case Against Import Targets," Books, American Enterprise Institute, number 51697, September.
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    Cited by:

    1. Qiu, Larry D. & Spencer, Barbara J., 2002. "Keiretsu and relationship-specific investment: implications for market-opening trade policy," Journal of International Economics, Elsevier, vol. 58(1), pages 49-79, October.
    2. Jan Bouckaert & Bruno De Borger, 2013. "Price competition between subsidized organizations," Journal of Economics, Springer, vol. 109(2), pages 117-145, June.

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    More about this item

    Keywords

    TRADE ; SUBSIDIES ; PUBLIC POLICY;
    All these keywords.

    JEL classification:

    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations

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