Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/71326
Authors: 
Davies, Ronald B.
Year of Publication: 
2010
Series/Report no.: 
Working Paper Series, UCD Centre for Economic Research 10/18
Abstract: 
An increasing number of international agreements require nondiscrimination from their participants, i.e. the government of one country cannot treat foreign firms differently from domestic firms. This is at odds with a government's desire to benefit its own citizens rather than foreign citizens. I show that the use of red tape - a wasteful application process - can achieve de-facto discrimination. Key to this result is firm heterogeneity since, although the red tape cost is constant across firms, only those sufficiently benefiting from an incentive program will find it worth the cost of applying. If the benefits of targeting subsidies outweigh the burden of red tape on domestic firms, red tape will be used.
Subjects: 
Red tape
Firm heterogeneity
Production subsidies
Discrimination
JEL: 
H2
F2
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

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