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Article
Equilibrium State Aid in Integrating Markets
The B.E. Journal of Economic Analysis (2008)
  • Paola Valbonesi
  • Stephen Martin, Purdue University
Abstract

We present a model of the impact of state aid on equilibrium market structure and on market performance in an integrating market when the process of integration is driven by consumer inertia. In a partial equilibrium model, it is an equilibrium for governments to grant state aid, even though this reduces common market welfare.

Keywords
  • state aid,
  • exit,
  • market integration
Disciplines
Publication Date
2008
Citation Information
Paola Valbonesi and Stephen Martin. "Equilibrium State Aid in Integrating Markets" The B.E. Journal of Economic Analysis Vol. Vol. 8 Iss. 1 (2008)
Available at: http://works.bepress.com/paola_valbonesi/9/