TY  - JOUR
AU  - Spencer,Barbara J.
TI  - Capital Subsidies and Countervailing Duties in Oligopolistic Industries
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 2519
PY  - 1988
Y2  - February 1988
UR  - http://www.nber.org/papers/w2519
L1  - http://www.nber.org/papers/w2519.pdf
N1  - Author contact info:
Barbara J. Spencer
University of British Columbia
Sauder School of Business
2053 Main Mall
Vancouver, BC  V6T 1Z2
CANADA
Tel: 604/822-8479
Fax: 604/822-8477
E-Mail: barbara.spencer@sauder.ubc.ca
AB  - Under GATT, countries are allowed to impose countervailing duties to offset foreign subsidies. However GATT rules limit the amount of duty to the amount of the subsidy. This paper examines a generalized model of imperfect competition with capital subsidies and shows the conditions under which a countervailing duty will offset the effect of the subsidy on exports. Also, conditions are specified under which exports will increase despite the imposition of the maximum tariff under GATT. In addition, the paper considers whether profit shifting motives for a subsidy still exist even when this maximum duty is anticipated.
ER  -