Production subsidy in export market

Описание: Analysis of a *production* subsidy in an export market. (Note this is a different analysis from an export subsidy--i.e. payments *only* if a firm exports the good. We will see that for a given increase in domestic production, the production subsidy will cause few distortions than the export subsidy. This is primarily because the export subsidy will increase domestic prices while the production subsidy will not