演講者簡介 : Professor Riezman received his Ph.D. in Economics from University of Minnesota at 1977. He is currently C. Woody Thompson Research Professor of Economics at the University of Iowa. His research fields are International Trade, Political Economy, and Microeconomics.
演講摘要 : We analyze the optimal industrial policy in an environment where the domestic firm has private information about its cost of production. We examine the case in which the foreign competitor's cost of production is low but the domestic firm can reduce its cost and become competitive if it is protected from foreign competition. While protecting the domestic firm, the government has to provide incentives for the firm to truthfully reveal whether it has reduced its cost. We solve a dynamic model in which industrial policy consists of three elements. First, each period the government imposes a quota on imports and provides a subsidy to the domestic firm that ensures that the domestic firm produces positive output. Second, if the domestic firm announces that the desired cost reduction has been achieved then the firm receives a one-time lump sum payment from the government. Finally, there is an endogenous cutoff date at which time the protection policy ends, no matter whether the domestic firm has achieved the desired cost reduction or not. Under the optimal policy, the quota increases over time and the subsidy decreases over time. The lump sum payment decreases over time and the policy ends essentially when the lump sum payment is zero. Under some conditions, the protection ends in finite time.
