Can subsidies for MARs be procompetitive?

Kala Krishna, Suddhasatwa Roy, Marie Thursby

Research output: Contribution to journalArticle

2 Scopus citations

Abstract

In contrast to recent literature, we show that market access requirements (MARs) can be implemented in a procompetitive manner even in the absence of threats in related markets. By focusing on subsidies that are paid only when the requirement is met, we show that a MAR can increase aggregate output relative to free trade provided that the right set of firms is targeted. In the context of a model with multiple Japanese and U.S. firms, we show that a MAR on U.S. imports is procompetitive as long as the U.S. firms are the ones targeted to receive the subsidy.

Original languageEnglish (US)
Pages (from-to)212-224
Number of pages13
JournalCanadian Journal of Economics
Volume34
Issue number1
DOIs
StatePublished - Jan 1 2001

All Science Journal Classification (ASJC) codes

  • Economics and Econometrics

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