Multilateral subsidy games
This paper examines the rationale for multilateral agreements to limit investment subsidies. The welfare ranking of symmetric multilateral subsidy games is shown to depend on whether or not investment levels are ``friendly, raising rival profits in total, and/or strategic complements, raising rival profits at the margin. In both Cournot and Bertrand competition, when spillovers are low and competition is intense (because goods are close substitutes), national-welfare-maximizing governments over-subsidize investment, and banning subsidies would improve welfare. When spillovers are high, national governments under-subsidize from a global welfare perspective, but the subsidy game is welfare superior to non-intervention.
- A rationale for the WTO prohibition of export subsidies: Strategic export subsidies and world welfare
- Multi-stage strategic trade policy in a differentiated duopoly
- Inefficient lock-in and subsidy competition
- A contingent claims analysis of optimal investment subsidy
- Optimal Trade and Industrial Policy under Oligopoly
- Understanding agreements on TRIPS and subsidies in tandem
- A rationale for the WTO prohibition of export subsidies: Strategic export subsidies and world welfare
- A Little Help from My Friend: International Subsidy Games with Isoelastic Demands
- International trade and competitiveness
- Inefficient lock-in and subsidy competition
- Multi‐tier pricing in uniform and non‐uniform tax/subsidy systems
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