Please use this identifier to cite or link to this item: https://hdl.handle.net/10356/155143
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dc.contributor.authorDubey, Ram Sewaken_US
dc.contributor.authorKang, Minwooken_US
dc.date.accessioned2022-02-14T06:26:56Z-
dc.date.available2022-02-14T06:26:56Z-
dc.date.issued2020-
dc.identifier.citationDubey, R. S. & Kang, M. (2020). Industrial subsidy policy and the optimal level of specialization. Economic Modelling, 91, 81-88. https://dx.doi.org/10.1016/j.econmod.2020.05.025en_US
dc.identifier.issn0264-9993en_US
dc.identifier.urihttps://hdl.handle.net/10356/155143-
dc.description.abstractDespite compelling rationale based on the theory of comparative advantage for free trade, many countries adopt restrictive trade practices. In this paper we investigate this puzzle in a stylized two-country two-good Ricardian model of international trade. Governments can offer protection to domestic industries via industrial subsidy policy in this model. We prove the existence of a Nash equilibrium in the two-player game where industries choose the level of specialization. We determine the necessary conditions for complete specialization in (a) the free-trade regime; and (b) the protectionist regime implemented through industrial subsidy policy. Our results show that if the government intends to promote complete specialization, then a high degree of comparative advantage and a large elasticity of substitution between export and import goods are required. Empirical evidence on these two parameters indicate that complete specialization is unlikely to survive in the protectionist regime.en_US
dc.language.isoenen_US
dc.relation.ispartofEconomic Modellingen_US
dc.rights© 2020 Elsevier B.V. All rights reserved.en_US
dc.subjectSocial sciences::Economic developmenten_US
dc.titleIndustrial subsidy policy and the optimal level of specializationen_US
dc.typeJournal Articleen
dc.contributor.schoolSchool of Social Sciencesen_US
dc.identifier.doi10.1016/j.econmod.2020.05.025-
dc.identifier.scopus2-s2.0-85086093654-
dc.identifier.volume91en_US
dc.identifier.spage81en_US
dc.identifier.epage88en_US
dc.subject.keywordsComparative Advantageen_US
dc.subject.keywordsComplete Specializationen_US
item.fulltextNo Fulltext-
item.grantfulltextnone-
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