Subsidizing National Champions: An Evolutionary Perspective

43 Pages Posted: 1 Sep 2008

See all articles by Cecile Aubert

Cecile Aubert

GREThA; French National Institute for Agricultural Research (INRA) - Laboratoire d'Economie des Ressources Naturelles (LERNA)

Oliver Falck

CESifo (Center for Economic Studies and Ifo Institute) - Department Human Capital and Innovation

Stephan Heblich

University of Stirling - Department of Economics

Date Written: August 2008

Abstract

A national-champions-related industrial policy has become (again) en vogue among European politicians. Against this background, our work orders different types of national champions along the industry lifecycle. Different types of locally bound externalities appear along the lifecycle. In a simple model, we show that it may be efficient to subsidize innovative firms in their early stages or to protect mature firms from competition to appropriate these externalities. However, non-benevolent politicians may not choose efficient policies. Real-world examples indicate that politicians tend to concentrate on externalities at the mature stage of the lifecycle. These externalities may be transitory or at the expense of foreign country consumers.

Keywords: national champions, industrial policy, industry lifecycle, externalities

JEL Classification: L52, O25, O33, P11

Suggested Citation

Aubert, Cecile and Falck, Oliver and Heblich, Stephan, Subsidizing National Champions: An Evolutionary Perspective (August 2008). CESifo Working Paper Series No. 2380, Available at SSRN: https://ssrn.com/abstract=1261796 or http://dx.doi.org/10.2139/ssrn.1261796

Cecile Aubert

GREThA ( email )

Avenue Leon Duguit
33608 Pessac Cedex, 33608
France

French National Institute for Agricultural Research (INRA) - Laboratoire d'Economie des Ressources Naturelles (LERNA) ( email )

21, Allee de Brienne
31000 Toulouse
France

Oliver Falck (Contact Author)

CESifo (Center for Economic Studies and Ifo Institute) - Department Human Capital and Innovation ( email )

Poschingerstr. 5
Munich, 81679
Germany

Stephan Heblich

University of Stirling - Department of Economics ( email )

Stirling, Scotland FK9 4LA
United Kingdom

HOME PAGE: http://www.management.stir.ac.uk/people/economics/academic-staff/dr-stephan-heblich

Do you have negative results from your research you’d like to share?

Paper statistics

Downloads
157
Abstract Views
1,261
Rank
339,922
PlumX Metrics