On the Effectiveness of Uniform Subsidies in Increasing Market Consumption
研究中央计划者在预算约束下通过补贴增加商品消费时，统一补贴（每单位相同补贴）在何种条件下最优，即使企业效率不同，且通常接近最优社会福利。
We study the problem faced by a central planner trying to increase the consumption of a good, such as new malaria drugs in Africa. The central planner allocates subsidies to its producers, subject to a budget constraint and endogenous market response. The policy most commonly implemented in practical applications of this problem is uniform, in the sense that it allocates the same per-unit subsidy to every firm, primarily because of its simplicity and perceived fairness. Surprisingly, we identify sufficient conditions of the firms’ marginal costs such that uniform subsidies are optimal, even if the firms’ efficiency levels are arbitrarily different. Moreover, this insight is usually preserved even if the central planner is uncertain about the specific market conditions. Further in many cases, uniform subsidies simultaneously attain the best social welfare solution. Additionally, simulation results in relevant settings where uniform subsidies are not optimal suggest that they induce a nearly optimal market consumption. On the other hand, if the firms face a fixed cost of entry to the market, then the performance of uniform subsidies can be significantly worse, suggesting the need for an alternative policy in this setup. This paper was accepted by Yossi Aviv, operations management.