The primary predictions of strategic-trade theory are not restricted to imperfectly-competitive markets. Indeed, these … predictions emerge in a natural three-country extension of the traditional theory of trade policy in competitive markets, once the … theory is augmented to allow for politically-motivated governments, so that the sign of export policy may be converted from …

in the low-quality country and a subsidy in the high-quality country …

This paper presents a theory of government intervention which provides an explanation for "industrial strategy … incentive to try to capture a greater share of rent-earning industries using subsidies, but the subsidy-ridden international …

intervention in order to influence the government's choice of subsidy. In the event commitment to free trade may be desirable even …

also serve to shift rents to foreign firms supplying an intermediate good, weakening the incentive for the subsidy. By … final and intermediate good firms can strengthen the argument for an export subsidy if intermediate good firms are domestic …. The domestic welfare implications of alternative rent-shifting policies (a production subsidy and an import tariff) at the …

in the optimal subsidy, and it may be so great as to require a tax rather than a subsidy for high levels of uncertainty …

the input, the optimal subsidy will exceed the total fixed costs required, but will not have to be disbursed in …

inequality aversion and financing the subsidy is not too distortive …