English, Article, Journal or magazine article edition: Output subsidies and quotas under uncertainty and firm heterogeneity Bernardo Moreno Jiménez; José Luis Torres Chacón

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Physical Description
  • preprint
Language
  • English

Edition details

Title
  • Output subsidies and quotas under uncertainty and firm heterogeneity
Author
  • Bernardo Moreno Jiménez
  • José Luis Torres Chacón
Physical Description
  • preprint
Notes
  • This paper studies the relative efficiency of two kinds of regulations, quantity restrictions (quotas) and output subsidies, in an imperfectly competitive market under the existence of two sources of uncertainty: uncertainty in both costs and prices. We find that when the two sources of uncertainty are independently distributed, the output subsidy instrument has comparative advantage over the quantity instrument. However, when we take into account the possibility of correlation between the random components and across firms marginal costs, we find that a positive (negative) correlation tends to favor the quantity (subsidy) instrument. Finally, we show that when the correlation is positive, it is possible to find situations in which the quantity instrument has comparative advantage over the subsidy instrument.
  • Cost uncertainty, demand uncertainty, firm heterogeneity, output subsidy and quantity instruments
  • RePEc:cea:doctra:e2005_24
Language
  • English
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