Robust Rules for Industrial Policy in Open Economies |
Common terms and phrases
benchmark Bertrand competition CEPR cost-reducing investment Cournot competition demand functions derivatives Discussion Papers equation European Central Bank example export subsidies firm's profits firms choose firms compete first-order condition foreign firms respectively foreign investment raises friendliness and strategic functional forms Goswell Road Hence higher foreign investment home and foreign home firm investment levels investment reaction function investment subsidy remains investments are friendly investments are strategic levels are strategic levels are unfriendly Macroeconomics marginal cost marginal profitability market period market-expanding investment Nash equilibrium Neary and Leahy negative optimal industrial policy optimal investment subsidy positive investment subsidy pre-market period profitability of foreign raises home profits return to investment rise in home second-order condition Spencer and Brander strategic complements strategic effect strategic substitutability term strategic trade policy subscription subsidies to investment subsidy is optimal subsidy remains optimal University College Dublin welfare World Trade Organisation www.cepr.org μηγ