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Journal of Economic Integration 1997 March;12(1) :87-98.
DOI: https://doi.org/10.11130/jei.1997.12.1.87
Strategic Export Subsidies under a Budget Constraint: Ad Va l o rem versus Specific
Hong Hwang
Kaz Miyagiwa and 
Kar-yiu Wong 
National Taiwan University and ISSP, Academia Sinica
Louisiana State University
University of Washington
Copyright ©1997 Journal of Economic Integration
ABSTRACT
This note shows that in the Brander-Spencer model of export subsidy, if there is no cost of financing subsidies, either a specific export subsidy or an ad val orem export subsidy can be used to achieve the same maximum welfare level. If, however, there is a binding budget constraint, a specific subsidy dominates an ad valorem subsidy. (JEL Classification: F13)
 
REFERENCE
1. Hwang, H., K. Miyagiwa and K.-Y. Wong [1995], "Optimal Te c h n o l o g y Choice and Immizerizing Export Subsidy," unpublished manuscript.
2. Eaton, J. and G. Grossman [1988], "Optimal Trade and Industrial Policy under Oligopoly," Quarterly Journal of Economics; pp. 383-406.
3. Wong, K.-Y. [1995], International Trade in Goods and Factor Mobility, Cambridge, Mass.: MIT Press.
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