Abstract
Factor subsidies in a perfectly competitive setting are analysed. A very general model is used to derive expressions for the effect of a factor subsidy on the price and quantity of output and the two factor inputs. These expressions are differentiated to generate qualitative results for the impact of changes in the product-demand, production-function, and factor-supply parameters on the subsidy effects. A similar procedure is used to investigate the exchequer cost per job of general labour and capital subsidies in an industry with Cobb — Douglas technology. The analysis is relieved with illustrative simulations in which ‘representative’ parameter values are used.
| Original language | English |
|---|---|
| Pages (from-to) | 317-338 |
| Number of pages | 22 |
| Journal | Environment and Planning A |
| Volume | 25 |
| Issue number | 3 |
| DOIs | |
| Publication status | Published - Mar 1993 |
Keywords
- factor subsidies
- capital subsidies
- labour