Working Paper: NBER ID: w7624
Authors: Kala Krishna; Suddhasatwa Roy; Marie C. Thursby
Abstract: In contrast to recent literature, we show that market access requirements (MARs) can be implemented in a procompetitive manner even in the absence of threats in related markets. By focusing on subsidies that are paid only when the requirement is met, we show that a MAR can increase aggregate output relative to free trade provided that the right set of firms is targeted. In the context of a model with multiple Japanese and US firms, we show that a MAR on US imports is procompetitive as long as the US firms are the ones targeted to receive the subsidy.
Keywords: No keywords provided
JEL Codes: F13
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| MAR implementation targeting US firms (F23) | Aggregate output in the market (E10) |
| Contingent subsidies that incentivize increased output by US firms (L11) | Aggregate output in the market (E10) |
| MAR implementation targeting Japanese firms (F23) | Aggregate output in the market (E10) |
| Subsidies leading to decreased output by US firms (L11) | Aggregate output in the market (E10) |
| MAR implementation targeting both US and Japanese firms (F23) | Aggregate output in the market (E10) |
| Balanced subsidies leading to competitive responses from both sets of firms (D43) | Aggregate output in the market (E10) |