NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Rent-Shifting Export Subsidies with an Imported Intermediate Product

Jota Ishikawa, Barbara J. Spencer

NBER Working Paper No. 5458
Issued in February 1996
NBER Program(s):   ITI

This paper argues that export subsidies aimed at shifting rents from foreign to domestic producers of a final good may also serve to shift rents to foreign firms supplying an intermediate good, weakening the incentive for the subsidy. By contrast, assuming Cournot competition for both the final and intermediate goods, this second layer of rent-shifting between final and intermediate good firms can strengthen the argument for an export subsidy if intermediate good firms are domestic. The domestic welfare implications of alternative rent-shifting policies (a production subsidy and an import tariff) at the intermediate good stage are also considered.

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Document Object Identifier (DOI): 10.3386/w5458

Published: Journal of International Economics, Vol. 48, no. 2 (August 1999): 199-232. citation courtesy of

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