The effect of subsidy policies on the product quality improvement

This paper analyzes the effect of government subsidy policies on creating an incentive for domestic firms to improve their product quality before exporting to an outside market. The goal of the government is to minimize the time it takes to reach the appropriate product quality level at low costs. We simulate a dynamic profit maximization problem of the firm and derive the optimal path of the product quality development, then test the efficiency of the three types of subsidy methods: Constant Subsidy, Quality Matching Subsidy and Time-limited Subsidy methods. Our model yields a number of intriguing results: (i) not every subsidy methods guarantee product quality development, although the same amount is subsidized. (ii) the matching fund style subsidy is more efficient than providing constant amount of subsidy. (iii) Time-limited Subsidy improves product quality faster than the unlimited subsidy method. (iv) Time-limited Subsidy improves quality much faster than other methods with less subsidy cost. (v) there is an optimal combination between the subsidy and the time limits.     

扶持我国出口导向企业实施RRC战略的理论依据

文章探讨本国企业与外国企业在以产量竞争的方式争夺出口市场的情况下,本国政府对本国企业实施提高竞争对手成本(RRC)战略的投资进行补贴的理论依据。通过两次运用两阶段博弈,文章对由补贴政策、企业RRC投资、产量和利润水平决定构成的三阶段博弈进行了因果关系的比较静态分析,认为在一般情况下,对本国企业RRC投资补贴有利于本国企业在国际市场中产量、市场份额和利润的增加,也有利于本国社会总福利水平的增加,对外国企业产量、利润和社会福利则形成负面影响。由于RRC战略较之掠夺性定价温和且更易实施,这一政策对于保持我国出口稳定增长具有一定积极意义。     

A DECADE OF DECLINING WELFARE PARTICIPATION: SORTING OUT THE CAUSES

Since the late 1970s, the proportion of all single-parent families receiving benefits from the Aid to Families with Dependent Children (AFDC) program has been declining. This is reversing an earlier two-decade trend. This paper uses data from the Current Population Survey so as to investigate the reasons for the decline. The analysis reveals that for the years prior to 1981, the decline has resulted both from an erosion in real AFDC guarantee levels–caused by high rates of inflation–and from changes in demographic conditions. For the years subsequent to 1981, the decline has resulted from an increase in effective AFDC benefit reduction rates caused by the Omnibus Reconciliation Act of 1981. Somewhat offsetting the participation rate decline were falling real child support collections and a rising unemployment rate.     

CASELOAD IMPACTS OF WELFARE REFORM

A welfare reform demonstration program designed to reduce Aid to Families with Dependent Children (AFDC) recidivism through increased employment and training services resulted in significantly higher short-term caseload growth. Demonstration sites attracted proportionally more households onto assistance early in the demonstration than did comparison sites. These entrants tended to have more extensive previous employment histories. This result suggests that the demonstration attracted individuals who previously qualified for AFDC but did not apply for benefits and/or individuals who reduced their employment to qualify for AFDC. Exits from AFDC also were delayed under the demonstration, suggesting that the more intensive services provided through the demonstration required more time to complete. Finally, certain groups—nonwhites and those with language problems, for example—apparently avoided the demonstration by not migrating into demonstration sites or by migrating out of demonstration sites. These results have important implications for the likely costs of state welfare reform efforts under the Family Support Act of 1988 .     

Locational choice of AFDC recipients within California: a conditional logit analysis

This paper examines factors that influence migration of AFDC recipients within California. A county level conditional logit model is used to analyze the impact of cost adjusted benefits on intrastate moves during recipients’ first year of welfare participation. Costs of living, particularly housing costs, differ considerably across counties of California, yet the welfare benefit is set at the state level. This creates the potential for variation in the purchasing power of the welfare benefit if a family chooses to move. Variation in cost of living is shown to have a significant effect on migration patterns of AFDC recipients. Estimates suggest that a $150 decrease in fair market rent results in 15% more migration to the county. Recipients’ migration is more responsive to cost of living than migration of the general population.     

The consumption benefits of investment in infrastructure: The evaluation of sites-and-services programs in underdeveloped countries

The justifications for housing subsidy programs in developing countries often rely upon substantial indirect benefits accruing to program participants (in the form of improved health, earning capacity or employment, or non-market activity). The empirical analysis in this paper suggests that such programs may often be justified solely on the basis of direct impacts. The paper presents a methodology for deriving rigorously the direct Hicksian benefits of housing subsidy programs such as ‘sites-and-services’ and ‘slum upgrading’ projects in developing countries. The methodology is used to evaluate the net benefits of a sites and services project typical of recent urban shelter programs sponsored by the World Bank. The results suggest that the direct benefits of such programs may be substantial. In the particular case analyzed, the rate of return approaches 40 percent.     

中国通用航空产业补贴效率及最优补贴制度研究—以低空飞行服务业为例

补贴效率是检验补贴制度设计合理性、运行有效性的核心标准。研究发现,我国通用航空飞行服务业补贴制度存在相对供给挤占、暂时性收益陷阱、恶性亏损经营和资金体内循环4类突出的效率损失及福利侵蚀问题,补贴对通航运营企业经营效益提升无显著影响。立足补贴效率受损形式并顺应有效供给和需求严重不足的产业发展矛盾,以社会福利和外部性为核心,从结构重塑、机制优化两个维度出发,全面建立我国通用航空飞行服务业补贴制度并探讨最优补贴边界,最大化补贴效益。首先,以需求二维影响机制为理论支撑,搭建“需求侧保险费率补贴制度+供给端弹性补贴计划”的双侧补贴模式,减缓有效供需规模偏小对企业短期非理性补贴行为的过度激化。其次,从调整补贴标准、丰富补贴层次、规范补贴流程、定位补贴属性4个方面着手深度优化供给侧补贴计划,并以应用事后补贴安排、筹建再保险补贴基金的形式细化需求侧补贴内容,以期最大程度减少补贴效率损耗对预期补贴福利的影响。     

Importing the Poor: Welfare Magnetism and Cross-Border Welfare Migration

I test for welfare-induced migration by comparing AFDC participation in border counties to interior counties in the same state. If migration costs are lower for border county residents, border counties on the high-benefit side of a state border should have higher welfare participation relative to the state's interior counties. Border counties on the low-benefit side should have lower welfare participation relative to the state's interior counties. The results obtained using county-level data from 1970-90 indicate that having a neighbor with benefits that are $100 lower increases AFDC expenditures in border counties by 4.0-6.8 percent relative to interior counties.     

The benefits and costs of the section 8 existing housing program

The demand-side Section 8 Existing Housing Program begun in 1975 is currently the second largest low-income housing program in the United States with over one million units. This paper presents estimates of the benefits and costs of the program and examines its allocative and distributive effects. The effects of Section 8 Existing are compared with those under an alternative program of equal-subsidy, unrestricted cash grants. Among other things, it is found that the average monthly subsidy of $100 is valued by recipients at $83 on average. Recipients are induced to consume 11 percent more housing and 6 percent less of other goods than they would with the cash grant. Recipient households near the eligibility income limits do not receive so large a benefit as to become better off than ineligible households. The poorest and largest families receive the largest benefit, other things equal. However, most poorer families are excluded while some richer families participate and equally situated families do not receive the same offer of assistance.     

AFDC and illegitimacy ratios: a vector-autoregressive model

The expansion of the government programme of Aid to Families of Dependent Children (AFDC) plays a major role in theoretical explanations of the sharply rising trend in US illegitimacy ratios–the proportion of births occurring to unwed mothers. To date, this role has not been supported by empirical evidence. The present study uses a new approach: time-series data and Granger causation. A series of tests shows robust causal impacts of AFDC on non-white illegitimacy ratios. A counterfactual simulation reveals that about half the increase in non-white illegitimacy ratios over the past two decades can be attributed to an ‘AFDC effect’.     

The effects of alternative urban transit subsidy formulas

This paper demonstrates that for a given cost to the taxpayer, the effects of a transit subsidy depend on the subsidy formula, the objective function of the transit firm, and the transit demand function. Under most assumptions, a subsidy would lead to a lower fare, more service, and more riders, but under some assumptions the fare would remain unchanged or increase. If a transit firm maximizes ridership, lump sum and passenger subsidies will have the same effects but a cost subsidy with the same cost to taxpayers will lead to a higher fare, more service, and lower ridership.     

Equity,externalities and energy subsidies The case of kerosine in Indonesia

This paper examines two arguments used to justify the subsidy provided kerosine, the primary commercial fuel of Indonesian households. One argument holds that the subsidy reduces deforestation externalities resulting from wood gathering. Econometric analysis of a large cross-section of households finds that firewood/kerosene substitution is very limited in Java, where the deforestation problem is most severe, so that kerosene subsidy is not an effective means of alleviating the problem. The second argument holds that social equity requires the subsidization of ‘basic needs’ such as kerosene. It is found that the kerosene subsidy disproportionately benefits urban and wealthier households.     

A method for estimating the effect of a subsidy on the receiver's resource constraint: with an application to U.S. local governments 1964–1971

Most studies of the effects of subsidies or recipient behavior accept the nominal legal provisions of a grant as defining the actual effective resource constraint faced by the receiver. This paper argues that to the contrary the true effect of a subsidy on the receiver's resource constraint can not be read from nominal administrative requirements. Therefore, an indirect statistical method is required to discover the shape of the post subsidy budget line. This paper develops such a method, which is then applied to U.S. local government expenditure decisions on education for the period 1964–71.     

Interregional negotiations and strategic delegation under government subsidy schemes

We examine the strategic delegation problem in the context of interregional negotiations under the subsidy policies of a central government. It is well known that when such negotiations are delegated to representatives, each region in a country elects its representative strategically, resulting in inefficient negotiation outcomes. This study focuses on a common subsidy policy called a cost-matching grant to examine whether an optimal grant exists that restores the efficiency of negotiation outcomes. Our results show that the central government obtains this optimal grant if the manipulability of the negotiation breakdown outcome is sufficiently weak. The strength of the manipulability is important because introducing a grant generates a new kind of manipulation of negotiation breakdown outcomes. However, when a new representative is elected after a negotiation breaks down, the new manipulability is negated. Hence, the central government always obtains the optimal cost-matching grant.     

Public subsidies and new ventures’ use of bank loans

Access to financial resources is crucial for young firms to strive. To foster innovation and growth in these firms, governments address financing constraints by initiating public support programs. For such financial support to be effective, it is, however, important that firms are able to augment publicly provided resources with additional means. This study examines the relationship between new ventures’ subsidy receipt and long-term bank loans. Studying new ventures founded between 2005 and 2009 in Germany, we test whether the subsidy itself facilitates use to bank financing. Applying econometric techniques that account for the endogenous nature of a subsidy receipt, we find that subsidized young firms are more likely to use bank loans and to have obtained a larger share of their financing mix from banks. We further show that this effect is stronger in highly information-opaque sectors. These results suggest that the effect may be attributed to an information value carried by the grant that is relevant to banks’ loan assessment procedures, especially when new venture value is difficult to judge.     

Why Subsidise Private Health Insurance?

What are the economic rationales for the public subsidy of private health insurance? Inducing more people to purchase private cover has the potential to create a positive fiscal externality, as it frees up the limited public beds and other public resources for people who cannot afford private health insurance. Investigating this quantitatively, based on short‐run demand estimates, we find that the subsidy cannot be justified on the basis of this externality effect alone. We estimate that the optimal subsidy is actually negative, that is, a tax on private health insurance premiums. On the other hand, the externality does finance some of the costs. We then consider a long‐run dynamic version, consistent with the government's stated rationales for the reforms. In this context, the subsidy might be justified, or at least largely offset, by the fiscal externality. We then discuss other rationales for a subsidy and implementation issues.     

Optimal fiscal policy in the Uzawa-Lucas model with externalities

Summary. This paper devises a fiscal policy by means of which the first-best optimum equilibrium is attained as a market equilibrium in the Uzawa-Lucas model when average human capital has an external effect on productivity. The optimal policy requires the use of a subsidy to investment in human capital which can be financed by a tax on labor income. Lump-sum taxation is not required to balance the government budget either in the steady state or in the transitional phase. Physical capital income should not be taxed. Alternatively, the optimal growth path can be attained by means of a subsidy to human capital. Received: March 21, 2002; revised version: September 4, 2002 RID="*" ID="*" Financial support from the Spanish Ministry of Science and Technology through PNICDYIT grant SEC2002-03663 is gratefully acknowledged.     

Incentive mechanisms for environmental protection under asymmetric information: a case study

The purpose of this paper is to compare the performance of some instruments of environmental policy, using data for a coal-fired power plant. Each decentralized scheme coverages towards the social optimum, chosen by a regulator. We look at the performance of a changing tax rate on emission, of an announcement of the tax formula, of an announcement of the tax formula with a tax refund possibility, and of a tax-cum subsidy scheme. Our emphasis is on full information concerning the tax and subsidy formulas and on the opportunity for the firm to optimize intertemporally. We also test two performance schemes which combine social optimal pricing with optimal abatement decisions. Our interest is to compare the speed of convergence of the schemes, the monetary side payments (subsidy, bonus) required, and to look for self-financing schemes.     

The Kornai Effect and Soft Budget Constraints

The Kornai effect refers to situations where soft budget constraints lead to higher input demands. This paper studies the Kornai effect under different scenarios: nonrandom subsidy rate, random subsidy rate, and random and endogenous subsidy rate; and gives sufficient, sometimes necessary and sufficient, conditions for the Kornai effect to exist.     

科技创新补贴供给侧改革与企业研发策略研究*

本文利用2010—2015年沪深A 股上市公司的科技创新补助与R&D研发数据，分析了中国供给侧改革中创新驱动政策对企业创新行为与策略选择的引导激励效果。研究发现：随着创新驱动供给侧改革的实施，企业进行R&D研发投入的意愿得到加强，开始偏好长期研发投入。创新补贴认定与考核标准相关政策机制落地，地方政府的无效创新补贴激励机制被抑制。在供给侧改革下，企业对创新长期驱动与短期经济效益进行理性权衡抉择，减少了外观设计专利等策略性创新成果的产出。本文进一步通过对产权性质分组还发现：供给侧改革后，国有企业创新产出激励最为突出，大幅度增加了专利的申请。而民营企业则通过扩大长期研发项目的投入和聘用储备技术人员，为下一阶段的创新研发作铺垫。