The 1996 Telecommunications Act opened the monopolistic U.S. local telephone industry to new entrants. However, substantial entry costs have prevented some markets from becoming competitive. We study various subsidy policies designed to encourage entry. We estimate a dynamic entry game using data on both potential and actual entrants, allowing for heterogeneous option values of waiting. We find...

This paper analyzes the incentives for governments to impose export subsidies when firms invest in a cost saving technology before market competition. Governments first impose an export subsidy or a tax. After observing export policy, firms invest in cost reducing R&D and subsequently compete in the market. Governments subsidize exports under Cournot competition. Under Bertrand competition, exp...

Using a unique firm level data set from the Chinese manufacturing sector, this paper analyses the impact of production subsidies on firms’ export performance. It documents robust evidence that production subsidies stimulate export activity, although this effect is conditional on firm characteristics. In particular, the beneficial impact of subsidies is found to be more pronounced amongst profit...

Concerns about the quality of state-financed nursing home care has led to the wide-scale adoption by states of pass-through subsidies, in which Medicaid reimbursement rates are directly tied to staffing expenditure. We examine the effects of Medicaid pass-through on nursing home staffing and quality of care by adapting a two-step FGLS method that addresses clustering and state-level temporal au...

We combined an expert elicitation and a bottom-up manufacturing cost model to compare the effects of R&D and demand subsidies. We modeled their effects on the future costs of a low-carbon energy technology that is not currently commercially available, purely organic photovoltaics (PV). We found that (1) successful R&D programs reduced costs more than did subsidies, (2) successful R&D enabled PV...

Subsidies are considered important means to facilitate the provision of public transit, yet the empirical evidence implies that they can have harming effects on costs and possibly also on operators’ performance. This paper examines the impacts of deficit-balancing subsidies on the cost inefficiency of local public bus companies in Germany, where a complex system allocates ample financial suppor...

The implementation of a CO2 emissions control scheme, either a cap-and-trade program with auctioned permits or a carbon tax, will provide the government with an important new source of revenue. Several economists advocate for the redistribution of this carbon revenue i.e., for the emissions control schemes to be revenue neutral. In this paper, we present an optimization model to obtain redistri...

387 R ecent increases in international oil prices have resulted in substantial fuel subsidies in many developing and emerging market economies. After a long period of stability over the last two decades, international oil prices increased substantially from 2002. Prices increased from around US$25 per barrel in January 2003 to over US$65 per barrel by August 2005, an increase of about 260 perce...

because of electricity subsidies, electricity price in iran is much lower than its real value, and the growth of electricity demand is much more than its rational rate, which in turn implies ever increasing investment in the electricity section by the government. therefore, the recent government policies are based on elimination of electricity subsidies, followed by commissioning complete elect...