@techreport{52beb838d0124da792dbf94f50235445,
title = "A Subsidy That Is Inversely Related to the Product Price",
abstract = "This study considers a new subsidy design to support the purchase or production of target products. Under the proposed design, subsidy payments are inversely related to product prices. Compared to {\textquoteleft}flat{\textquoteright} subsidies, this design reduces producers{\textquoteright} market power and the subsidy benefits passed on to them, improving the cost-effectiveness of government spending (by up to 50% according to simulations based on an actual subsidy programme). Additionally, this subsidy{\textquoteright}s cost-effectiveness and incidence can be adjusted flexibly by changing the policy parameters. Finally, the subsidy design can be modified to provide larger payments to higher-quality products, thereby offsetting disincentives for quality improvement.",
keywords = "IR subsidy, Cost-Effectiveness, Incidence, imperfect competition, supermodular games",
author = "Takahiko Kiso",
year = "2021",
month = sep,
day = "9",
language = "English",
volume = "21",
series = "Discussion Papers in Economics and Finance",
publisher = "University of Aberdeen",
number = "2",
pages = "1--49",
address = "United Kingdom",
edition = "2",
type = "WorkingPaper",
institution = "University of Aberdeen",
}