|Title:||On assisting domestic industries under Bertrand competition|
|Authors :||Egli, Dominik|
|Published in :||Review of International Economics|
|Publisher / Ed. Institution :||Wiley-Blackwell|
|License (according to publishing contract) :||Licence according to publishing contract|
|Type of review:||Peer review (Abstract)|
|Subject (DDC) :||338: Production|
|Abstract:||In a homogeneous-good duopoly game with a home and a foreign firm, which compete on prices, it has been shown that the optimal way to assist the domestic industry is by a production subsidy. The argument here is that the subsidy is used to keep potential competitive pressure on the foreign firm. This paper analyzes under which conditions this threat of entry of a subsidized home firm is credible. It is shown that in markets where the firms move before the government, a subsidy is not credible and dominated by a tariff in terms of welfare.|
|Departement:||School of Management and Law|
|Publication type:||Article in scientific Journal|
|Appears in Collections:||Publikationen School of Management and Law|
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