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Protectionism through Exporting: Subsidies with Export Share Requirements in China

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  • Fabrice Defever
  • Alejandro Riaño

Abstract

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.

Suggested Citation

  • Fabrice Defever & Alejandro Riaño, 2016. "Protectionism through Exporting: Subsidies with Export Share Requirements in China," Discussion Papers 2016-03, University of Nottingham, GEP.
  • Handle: RePEc:not:notgep:16/03
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    Cited by:

    1. World Bank Group, 2016. "Special Economic Zones in the Dominican Republic," World Bank Other Operational Studies 26103, The World Bank.
    2. Defever, Fabrice & Riaño, Alejandro, 2017. "Subsidies with export share requirements in China," Journal of Development Economics, Elsevier, vol. 126(C), pages 33-51.

    More about this item

    Keywords

    Export Subsidies; Export Share Requirements; Trade Policy; Heterogeneous;

    JEL classification:

    • F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence

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