Title: On assisting domestic industries under Bertrand competition
Authors : Egli, Dominik
Westermann, Frank
Published in : Review of International Economics
Volume(Issue) : 12
Issue : 3
Pages : 435
Pages to: 440
Publisher / Ed. Institution : Wiley-Blackwell
Issue Date: 2004
License (according to publishing contract) : Licence according to publishing contract
Type of review: Peer review (Abstract)
Language : English
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
DOI : 10.1111/j.1467-9396.2004.00459.x
ISSN: 0965-7576
URI: https://digitalcollection.zhaw.ch/handle/11475/12700
Appears in Collections:Publikationen School of Management and Law

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