The Regulation of Subsidies Affecting International Trade

Schwartz, Warren F.; Harper, Eugene W.

doi:10.2307/1287797

Cited by 39 publications

(11 citation statements)

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“…For example, a subsidy to research and development in an industry where intellectual property rights are difficult to enforce may have sound economic justification, yet appear quite "specific." 72 Schwartz and Harper (1972) take this type of criticism a step further. If a democratic society chooses to divert resources into a particular industry-such as family farming-who is to say that the program is waste?…”

Section: B Economic Commentary On Countervailing Dutiesmentioning

confidence: 99%

Trade Remedy Laws

Sykes

2005

SSRN Journal

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Section: B Economic Commentary On Countervailing Dutiesmentioning

confidence: 99%

Trade Remedy Laws

Sykes

2005

SSRN Journal

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“…A question then arises whether rules can be developed to distinguish "good" subsidies from "bad" subsidies, avoiding the welfare loss from the former while preserving the welfare gains from the latter. Schwartz and Harper (1972) are deeply skeptical of this enterprise, arguing that workable rules for the identification of welfare-reducing subsidies are impractical, particularly if one allows that "legitimate" subsidies may include those where the citizenry is willing to pay to preserve certain forms of inefficient enterprise (such as cultural industries or family farms).…”

Section: Coping With Complexity: Identifying and Structuring Tradementioning

confidence: 99%

The Economics of Public International Law

Sykes

2004

SSRN Journal

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This paper is a preliminary draft for eventual inclusion in the Handbook of Law and Economics, A. Mitchell Polinsky & Steven Shavell editors. It reviews and synthesizes the work of economists and law and economics scholars in the field of public international law. The bulk of that work has been in the area of international trade, but many of the ideas in the trade literature have implications for other subfields. Recent years have seen a significant increase in research on other topics as well. The paper begins with a general framework for thinking about the positive and normative economics of public international law, and then proceeds to a treatment of specific topics including customary law, strategic alliances and the laws of war, international trade, international investment, international antitrust, human rights law, conflicts of law, and the international commons (fisheries).

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“…Bagwell and Staiger (2002: chapter 10), for example, question the harsh treatment of export subsidies. Schwartz and Harper (1972) argue that 'subsidy' is not a well-defined concept, and that government expenditures resulting from a legitimate democratic process cannot be presumed to diminish public welfare, at least within the confines of the government's jurisdiction. Bagwell and Staiger (2006) also question the utility of disciplines on domestic subsidies.…”

Section: Introductionmentioning

confidence: 99%

United States – Measures Affecting Trade in Large Civil Aircraft (Second Complaint): some comments

Neven

2014

World Trade Review

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This paper provides limited comments on portions of the Appellate Body (AB) judgment. With respect to the existence of a subsidy under contracts with NASA and DOD, we find the discussion of whether Boeing has received a financial contribution to be a distraction from the core issuewhether the mix of monetary compensation, access to government personnel and facilities, and IP rights 'overcompensated' Boeing for the services it rendered (or whether the government paid more for those services than they were worth to the government). The panel's analysis of this core issue, which focused on whether Boeing was the principal beneficiary of the contracts, is flawed, but the alternative approach of the AB is equally flawed. The analogy between an R&D joint venture and equity infusion is dubious, and the existence of a benefit simply does not turn on how one dimension of the contract (the allocation of the resulting intellectual property rights (IP)) is specified. We also argue that even a contract that confers a 'benefit' (or economic rent) on Boeing could still be an efficient arrangement for the allocation of cost and prospective revenues between the two partners. With respect to adverse effects, we argue that the panel and AB failed to develop an adequate counterfactual with respect to product developments; that is, it is not implausible that if Boeing had not received a subsidy and would accordingly have developed the 787 later, Airbus would also have delayed the development of the A350. To determine the existence of adverse effects, the panel and AB should have considered the profit (or sales) of Airbus relative to what would have happened in this counterfactual world. Finally, we observe that the analysis of lost sales and 'price suppression' fails to consider the specific features of competition in the aircraft industry. Unlike what happens in the market with posted prices, when contracts are individually negotiated, whether the outcome of competition is affected by a subsidy depends on the relative cost position of the bidders. When Boeing is the lowest cost bidder, the only effect of the subsidy is to increase its rent, with no effect on sales or prices for Airbus. *

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The Regulation of Subsidies Affecting International Trade

Cited by 39 publications

References 0 publications

Trade Remedy Laws

Trade Remedy Laws

The Economics of Public International Law

United States – Measures Affecting Trade in Large Civil Aircraft (Second Complaint): some comments

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