Abstract
We study the effects of subsidies on agents competing with each other. Examples include R&D competition of firms, local governments’ expenditure to stimulate local markets, and election campaigns for political parties. We find that subsidies reduce social welfare and are not always beneficial for beneficiaries.
| Original language | English |
|---|---|
| Pages (from-to) | 11-22 |
| Number of pages | 12 |
| Journal | Journal of Economic Theory and Econometrics |
| Volume | 35 |
| Issue number | 2 |
| State | Published - Jun 2024 |
Keywords
- negative externality
- R&D investment
- Subsidies
- welfare effect
