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Should governments help winners or losers?

Pires, Armando José Garcia
Working paper
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URI
http://hdl.handle.net/11250/163102
Date
2007-10
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  • Discussion papers (SAM) [579]
Abstract
One central result in the strategic trade literature is that governments

should not support domestic ”losers” but domestic ”winners”.

We show that when first-mover advantages are taken into account, the

reverse holds, governments have stronger incentives to support domestic

”losers” that face foreign ”winners”. Accordingly, governments can

play Stackelberg against foreign Stackelberg leaders to prevent them from playing Stackelberg against domestic Stackelberg followers.
Publisher
Norwegian School of Economics and Business Administration. Department of Economics
Series
Discussion paper
2007:30

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