Affiliation:
1. University of Aberdeen , UK
Abstract
Abstract
This study considers a new subsidy design to support the purchase or production of target products. Under the proposed design, subsidy payments are inversely related to product prices. Compared to ‘flat’ subsidies, this design reduces producers’ market power and the subsidy benefits passed on to them, improving the cost-effectiveness of government spending (by up to 50% according to simulations based on an actual subsidy programme). Additionally, this subsidy’s cost-effectiveness and incidence can be adjusted flexibly by changing the policy parameters. Finally, the subsidy design can be modified to provide larger payments to higher-quality products, thereby offsetting disincentives for quality improvement.
Publisher
Oxford University Press (OUP)
Subject
Economics and Econometrics
Reference39 articles.
1. ‘Pharmaceutical policies: Effects of reference pricing, other pricing, and purchasing policies’;Acosta;Cochrane Database of Systematic Reviews,2014
2. ‘Supermodularity and complementarity in economics: An elementary survey’;Amir;Southern Economic Journal,2005
3. ‘The efficiency of indirect taxes under imperfect competition’;Anderson;Journal of Public Economics,2001
4. ‘Tax incidence in differentiated product oligopoly’;Anderson;Journal of Public Economics,2001
5. Discrete Choice Theory of Product Differentiation
Cited by
2 articles.
订阅此论文施引文献
订阅此论文施引文献，注册后可以免费订阅5篇论文的施引文献，订阅后可以查看论文全部施引文献