Revenue-Constrained Strategic Trade and Industrial Policy

J. Peter Neary and Dermot Leahy


We characterise optimal revenue-constrained trade and industrial policy towards dynamic oligopolies, prove that total net subsidy payments at the optimum are decreasing in the social cost of funds, and illustrate the implications in Cournot and Bertrand special cases.

Published in Economics Letters, 82:3, March 2004, 409-414.

JEL Codes: F12, L13

Keywords: Export Subsidies; R&D Subsidies; Social Cost of Funds; Strategic Trade Policy.

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