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The strategic effects of subsidies on output and subsidies on investment differ substantially in dynamic models where a government's commitment ability is limited. Output subsidies remain effective even as the period of commitment vanishes, but investment subsidies may become completely...
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largest in the open loop equilibrium and smallest in the competitive equilibrium. The initial price may be larger in the … Markov equilibria, so a decrease in market power may make the equilibrium appear less competitive. The benefit to …
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