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Targeted Export Subsidies as an Exercise of Monopoly Power

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  • John Dutton

Abstract

A country with monopoly power in its export good normally benefits from an export tax. However, if it exports to two countries and the tax on exports to one is suboptimal, then it may be best to subsidize exports to the other. This is more likely the smaller is the import demand elasticity in the country being taxed suboptimally and the larger the elasticity in the other. It is also more likely the larger are exports to the first and the smaller are exports to the other. Finally, it is more likely the less elastic is home export supply.

Suggested Citation

  • John Dutton, 1990. "Targeted Export Subsidies as an Exercise of Monopoly Power," Canadian Journal of Economics, Canadian Economics Association, vol. 23(3), pages 705-710, August.
    • Handle: RePEc:cje:issued:v:23:y:1990:i:3:p:705-10
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    Cited by:

    1. Fuller, Frank Harland, 1996. "The location of marginal production for value-added and intermediate goods: optimal policies and trade volumes," ISU General Staff Papers 1996010108000012147, Iowa State University, Department of Economics.
    2. Brooks, Harvey G., 1990. "Three studies in economics," ISU General Staff Papers 1990010108000010481, Iowa State University, Department of Economics.

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