Subsidies under uncertainty: Modeling of input- and output-oriented policies

Chen, You-hua; Chen, Mei xia; Mishra, Ashok K.

doi:10.1016/j.econmod.2019.05.005

Cited by 54 publications

(27 citation statements)

References 34 publications

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“…Recently, Yang et al () considered governmental subsidy in renewable energy project and showed that governmental subsidy improves the success of renewable energy development. Chen, Chen, and Mishra () recently compared input with output subsidy under uncertainty and concluded that input subsidy reduces risk. Cui, Wang, and Nie () addressed the subsidizing mechanism of countryside renewable energy innovation.…”

Section: Literature Reviewmentioning

confidence: 99%

Innovation subsidy under duopoly

et al. 2020

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Innovation plays extremely important roles in the society, and underinvestment in innovation popularly exists. This article aims to capture innovative subsidy with game theory model. First, unilateral subsidy stimulates both innovation and outputs of subsidized firms, while it deters those of opponents. Second, under innovation subsidy, relationship between subsidized firm's innovation and product substitutability satisfies a U shape. For opponents, it is also a U‐shaped relationship. Third, under unilateral subsidy, subsidizing high‐efficiency firms yields more innovation than subsidizing low‐efficiency firms. Finally, bilateral subsidy stimulates more innovation than unilateral subsidy. This study supports theory to subsidize innovation efficiently.

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Section: Literature Reviewmentioning

confidence: 99%

Innovation subsidy under duopoly

et al. 2020

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“…Then, further researches following Harry (1953) arose as extensive extensions. On one hand, much recent literature captured the mechanism to implement optimal trade policies (Chen et al, 2019;Nie, 2014Nie, , 2018. In detailed, Eaton and Grossman (1986) found that subsidies are always indicated for Cournot behavior, but taxes are generally optimal if firms engage in Bertrand competition.…”

Section: Literature Reviewmentioning

confidence: 99%

Optimal Trade Policies Under Product Differentiations

Yang

Nie

2020

Journal of Business Economics and Management

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This article focuses on the optimal international trade policy considered product differentiations. A duopoly model with a home firm in a developing country and a foreign firm in a developed country is established. The findings indicate that, the optimal tariff relies on the product differentiations significantly. On one hand, higher marginal cost of home firms have opposite effects on optimal tariff compared to higher marginal cost of foreign firms. On the other hand, the optimal tariff is monotonically decreasing in the amount of consumers caring about brands and increasing in the scale of consumers not caring about brands. Moreover, an increase in the marginal cost and transportation cost of imported goods triggers price rising in domestic market as the market power of home firms is consolidated. In addition, a foreign firm may withdraw from domestic market if its competitive advantages vanishes under high tariffs.

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“…where k 2½0,1 presents the product substitutability and the constant A>0 means market capacity without product endorsement. k ¼ 0 means that goods are independent and k ¼ 1 manifests perfect substitutes (Chen, Chen, & Mishra, 2019;Chen, Wan, & Wang, 2015;Liu et al, 2012;Nie, 2012;Nie, Wang, Chen, & Chen, 2018;Nie & Chen, 2012;Nie & Wang, 2018;Raykov & Calantone, 2014). According to (1), the celebrity product endorsement improves the corresponding market size efficiently, which affects the firm's other strategies, including price, outputs and so on.…”

Section: The Modelmentioning

confidence: 99%

Effects of celebrity endorsement on firms’ competition: from industrial organisation perspective

Wang

Chen

Nie

et al. 2019

Economic Research-Ekonomska Istraživanja

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Product endorsement is employed by many firms and most studies have proceeded based on management perspectives and ignored the strategic effects (or indirect effects). However, as a non-price competition, product endorsement behaviour's strategic effects are valuable to be considered and convenient to be captured by industrial organisation perspective. So, this paper's purpose is to reveal the strategic effects of product endorsement by industrial organisation perspective. First, the results of this paper show that celebrity endorsement decreases the rival's benefits. Second, under a unique endorser, the lower efficiency (measured by marginal production cost) firm's celebrity endorsement improves price difference and dispersion, which are direct effects of product endorsement. The higher efficiency firm's endorsement promotes the producer surplus, consumer surplus and social welfare, which are called indirect effects. Finally, celebrity endorsement has trigger effects. If one firm launches celebrity endorsement, the rational reaction for its rivals is also to engage in a similar behaviour. This paper expands the celebrity endorsement issue from management to economics perspective.

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Subsidies under uncertainty: Modeling of input- and output-oriented policies

Cited by 54 publications

References 34 publications

Innovation subsidy under duopoly

Innovation subsidy under duopoly

Optimal Trade Policies Under Product Differentiations

Effects of celebrity endorsement on firms’ competition: from industrial organisation perspective

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