The purpose of this paper is to examine the efficacy of export subsidization in a labor-managed economy. It will be shown that contrary to a capitalist economy, an export tax rather than a subsidy becomes an effective policy tool for a labor-managed economy to adopt in order to expand its market share. It is also demonstrated that an export subsidy of the domestic labor-managed country decreases the benefits of its own and the importing country, but increases the welfare of the foreign-competing capitalist.
Relation:
Journal of Comparative Economics 13(3), pp.473-480