Export Subsidies and International Market Share Rivalry / James A. Brander, Barbara J. Spencer.

Format:

Book

Author/Creator:

Brander, James A.

Contributor:

National Bureau of Economic Research.

Spencer, Barbara J.

Series:

Working Paper Series (National Bureau of Economic Research) no. w1464.

NBER working paper series no. w1464

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 1984.

Summary:

Countries often perceive themselves as being in competition with each other for profitable international markets. In such a world export subsidies can appear as attractive policy tools, from a national point of view, because they improve the relative position of a domestic firm in noncooperative rivalries with foreign firms, enabling it to expand its market share and earn greater profits. In effect, subsidies change the initial conditions of the game that firms play. The terms of trade move against the subsidizing country, but its welfare can increase because, under imperfect competition, price exceeds the marginal cost of exports. International noncooperative equilibriumis characterized by such subsidies on the part of exporting nations, even though they are jointly suboptimal.

Notes:

Print version record

September 1984.