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Reference: Dermot Leahy and J. Peter Neary, (2007). Multilateral Subsidy Games. Department of Economics (University of Oxford).Citable link to this page:


Multilateral Subsidy Games. Series: Discussion Papers

Abstract: 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 will 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.

Bibliographic Details

Issue Date: 2007Identifiers

Urn: uuid:1b48f1f0-1284-4c16-92c3-934a9dcb461c Item Description

Type: info:eu-repo/semantics/workingPaper;

Language: en


Author: Dermot Leahy - - - J. Peter Neary - - - - Bibliographic Details Issue Date: 2007 - Identifiers Urn: uuid:1b48f1f0-1284-4c16-92c3-



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