Exbrayat, Nelly; Gaigné, Carl; Riou, Stéphane - Département Sciences Sociales, Agriculture et … - 2009
We build a model of trade and location with two countries which differ with respect to their level of productivity. Public expenditures are shared between a subsidy to firms reducing the labor cost and another one to households. We show that the high-productivity country pays a lower net subsidy...