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Anti-agglomeration Subsidies with Heterogeneous Firms

This paper studies anti-agglomeration subsidies in a core-periphery setting when firms are heterogeneous in terms of efficiency, focusing on the positive and normative effects of various subsidy forms (specific versus proportional), various tax-financing schemes (local versus global) and various capital-labour endowment ratios (symmetric versus asymmetric). Anti-agglomeration subsidies are shown to have ambiguous welfare effects and the determinants of the sign and size of the welfare impact are characterised.

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File URL: http://repec.graduateinstitute.ch/pdfs/Working_papers/HEIWP16-2006.pdf
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Paper provided by Economics Section, The Graduate Institute of International Studies in its series IHEID Working Papers with number 16-2006.

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Length: 28
Date of creation: Mar 2006
Handle: RePEc:gii:giihei:heiwp16-2006
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  21. Torsten Persson & Guido Tabellini, 2002. "Political Economics: Explaining Economic Policy," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262661314, July.
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