World Increasing Returns and Production Subsidies

Abstract

Increasing returns of the international kind as opposed to the usual national kind do not justify subsidies by a small country.

External economies of scale, government purchasing commitment and welfare improvements in the vaccines industry

“…Externalities are identified as one of the causes of market failures, whose distortions should be corrected through regulation. Previous studies have granted support to the view that government intervention is justified in front of externalities; See for instance:Chandra, Franck and Naqvi (2002),Helpman and Krugman (1985), and Panagariya (1981).2 Another possible approach adopts a demand-side perspective: The so-called network economies of scale result in individuals enjoying better market conditions as new consumers enter the industry. Although this is an interesting phenomenon, its analysis is left aside for the moment.…”