Specific vs Ad Valorem Strategic Export Subsidies with Taxation Distortion
Journal
Review of Development Economics
Journal Volume
19
Journal Issue
4
Pages
820-828
Date Issued
2015
Author(s)
Abstract
This paper employs a model to compare the welfare between optimal specific and ad valorem export subsidies if the subsidy payment is financed by distortional taxation. It is found that the welfare under the specific subsidy regime is higher (lower) than that under the ad valorem subsidy regime if the social cost of taxation distortion is low (high). Moreover, the signs of the two optimal subsidies are also crucially dependent on this social cost. They are positive (negative) if the social cost is low (high).
SDGs
Type
journal article