The first essay explores the nature of the equilibria obtained when state governments
conduct industrial policies to affect firms' location choices. The model differs from
existing ones by considering industrial policy targeted at small firms. In a simple two-region,
two-industry model with imperfection information, it is shown how regions
attempt to attract firms from the neighbouring one, either by making cash or in-kind
transfers. The model rationalizes the use of in-kind subsidies for incentive-compatibility
reasons, even though they are valued less by firms than what they cost
to provide. It allows to understand why regions with a smaller industrial base may
pursue a more aggressive industrial policy. The model sheds some light on which
industries are likely to be targeted by industrial policy, and how the means of income
transfers could be selected.
The objective of the second paper is to determine under which circumstances an
industrial policy that seeks to increase the number of new technologically-based firms
in the economy is best assigned to the central or regional governments in a federation.
Even though a decentralized industrial policy may be more flexible, it has the drawback
that regions compete against each other to acquire successful firms. Because this
margin is closed to a central government, it is likely to achieve a better outcome even
if operating under "uniformity" constraints. The public policy implication is that this
type of industrial policy should be transferred to the federal government.
The third essay presents a new rationale for intergovernmental grants in a federation that arises strictly from the income redistribution concerns of the federal government.
The central government seeks to redistribute income across agents, and behaves as
a Stackelberg leader with respect to regional governments. Intergovernmental grants
are needed to effect income redistribution while maintaining appropriate expenditure
levels. Differentiated grants allow in some circumstances to implement a "third-best"
solution when nominal prices differ across regions. They allow the federal government
to affect provincial tax rate and public good provision, thus complementing the income
redistribution done directly through the federal income tax system.
| Identifer | oai:union.ndltd.org:LACETR/oai:collectionscanada.gc.ca:BVAU.2429/6763 |
| Date | 11 1900 |
| Creators | Delage, Benoit |
| Source Sets | Library and Archives Canada ETDs Repository / Centre d'archives des thèses électroniques de Bibliothèque et Archives Canada |
| Language | English |
| Detected Language | English |
| Type | Electronic Thesis or Dissertation |
| Relation | UBC Retrospective Theses Digitization Project [http://www.library.ubc.ca/archives/retro_theses/] |
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