Targeted export promotion with several oligopolistic industries

Avinash K. Dixit; Gene M. Grossman

doi:10.1016/0022-1996(86)90038-3

Targeted export promotion with several oligopolistic industries

Avinash K. Dixit, Gene M. Grossman

Princeton School of Public and International Affairs

Research output: Contribution to journal › Article › peer-review

85 Scopus citations

Abstract

We study export promotion policies in situations where several oligopolistic industries compete for the services of a sector-specific factor of production. The partial equilibrium argument for strategic subsidies must be modified to incorporate general equilibrium effects working through the factor market. We find that these effects generally weaken the case for profit-shifting subsidies. In a benchmark case with symmetric exporting industries, fixed coefficients technologies and an inelastic supply of the specific factor, free trade is shown to be optimal.

Original language	English (US)
Pages (from-to)	233-249
Number of pages	17
Journal	Journal of International Economics
Volume	21
Issue number	3-4
DOIs	https://doi.org/10.1016/0022-1996(86)90038-3
State	Published - Nov 1986

All Science Journal Classification (ASJC) codes

Finance
Economics and Econometrics

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10.1016/0022-1996(86)90038-3

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abstract = "We study export promotion policies in situations where several oligopolistic industries compete for the services of a sector-specific factor of production. The partial equilibrium argument for strategic subsidies must be modified to incorporate general equilibrium effects working through the factor market. We find that these effects generally weaken the case for profit-shifting subsidies. In a benchmark case with symmetric exporting industries, fixed coefficients technologies and an inelastic supply of the specific factor, free trade is shown to be optimal.",

author = "Dixit, {Avinash K.} and Grossman, {Gene M.}",

note = "Funding Information: support provided by the National Science Foundation under and PRA-8211940 and the International Labor ANairs under contract J9K30006. We also thank Assar Razin. Carl comments.",

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N2 - We study export promotion policies in situations where several oligopolistic industries compete for the services of a sector-specific factor of production. The partial equilibrium argument for strategic subsidies must be modified to incorporate general equilibrium effects working through the factor market. We find that these effects generally weaken the case for profit-shifting subsidies. In a benchmark case with symmetric exporting industries, fixed coefficients technologies and an inelastic supply of the specific factor, free trade is shown to be optimal.

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ER -

Targeted export promotion with several oligopolistic industries

Abstract

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