Arbeitspapier
The political economy of restructuring and subsidisation: an international perspective
In today s increasingly competitive business environment, many firms in declining industries have been confronted with the need to restructure.However, lobbies in these industries have often managed to attract government subsidies instead.This paper looks at the decision of a loss-making firm whether to lobby for subsidies or whether to restructure in the context of a contributions game as in Magee et al.(1989).We further analyse the role of tariffs in restricting uncompetitive practices such as granting state aid to unprofitable firms.Several results stand out.Firstly, there is a trade-off between spending resources on lobbying for subsidies and costly restructuring such that both restructuring and subsidisation take place in our model.Secondly, countervailing tariffs on subsidised exports shift the decision in favour of restructuring, thereby hardening budget constraints. Hence, the model illustrates that external constraints such as countervailing tariffs can help to establish internal financial discipline when first-best solutions are politically unfeasible. Thirdly, the social planner always prefers full restructuring implying that political competition comes at a cost of lower economic welfare in our model.
- ISBN
-
951-686-966-1
- Sprache
-
Englisch
- Erschienen in
-
Series: BOFIT Discussion Papers ; No. 12/2004
- Klassifikation
-
Wirtschaft
Socialist Systems and Transitional Economies: Political Economy; Property Rights
Trade Policy; International Trade Organizations
- Thema
-
soft budget constraints
restructuring
political economy
lobbying
trade policy
declining industries
- Ereignis
-
Geistige Schöpfung
- (wer)
-
Everaert, Greetje M.M.
- Ereignis
-
Veröffentlichung
- (wer)
-
Bank of Finland, Institute for Economies in Transition (BOFIT)
- (wo)
-
Helsinki
- (wann)
-
2004
- Handle
- Letzte Aktualisierung
-
10.03.2025, 11:45 MEZ
Datenpartner
ZBW - Deutsche Zentralbibliothek für Wirtschaftswissenschaften - Leibniz-Informationszentrum Wirtschaft. Bei Fragen zum Objekt wenden Sie sich bitte an den Datenpartner.
Objekttyp
- Arbeitspapier
Beteiligte
- Everaert, Greetje M.M.
- Bank of Finland, Institute for Economies in Transition (BOFIT)
Entstanden
- 2004
Ähnliche Objekte (12)
The Political Economy of Restructuring and Subsidisation: An International Perspective
The political economy of euro area sovereign debt restructuring
Trade liberalization during transition: A political economy perspective
Political economy of privatisation: Poland in comparative perspective
Economic sociology and political economy: A programmatic perspective
Market and State: The Perspective of Constitutional Political Economy
The political economy debate on financialisation' a macroeconomic perspective
The political economy of the 'resource curse': A development perspective
Family taxation, fertility, and horizontal equity: A political economy perspective
Government support for restructuring the East German economy
The political economy of organizational change: industrial restructuring and industrial relations in France: Le cas Renault
The European Constitution Project from the Perspective of Constitutional Political Economy
The Political Economy of Restructuring and Subsidisation: An International Perspective
The political economy of euro area sovereign debt restructuring
Trade liberalization during transition: A political economy perspective
Political economy of privatisation: Poland in comparative perspective
Economic sociology and political economy: A programmatic perspective
Market and State: The Perspective of Constitutional Political Economy
The political economy debate on financialisation' a macroeconomic perspective
The political economy of the 'resource curse': A development perspective
Family taxation, fertility, and horizontal equity: A political economy perspective
Government support for restructuring the East German economy
The political economy of organizational change: industrial restructuring and industrial relations in France: Le cas Renault
The European Constitution Project from the Perspective of Constitutional Political Economy
The Political Economy of Restructuring and Subsidisation: An International Perspective
The political economy of euro area sovereign debt restructuring
Trade liberalization during transition: A political economy perspective
Political economy of privatisation: Poland in comparative perspective
Economic sociology and political economy: A programmatic perspective
Market and State: The Perspective of Constitutional Political Economy
The political economy debate on financialisation' a macroeconomic perspective
The political economy of the 'resource curse': A development perspective
Family taxation, fertility, and horizontal equity: A political economy perspective
Government support for restructuring the East German economy
The political economy of organizational change: industrial restructuring and industrial relations in France: Le cas Renault