Innovative subsidy schemes under a limited budget: how and when do they matter
受医疗领域全球预算概念启发，提出一种不预先承诺补贴金额、而在补贴期末确定的创新补贴方案，并在无竞争寡头市场中评估其效果，发现该方案能减少产量、提升产品质量和企业利润，且在预算充足时提高社会福利。
Inspired by the global budget concept in health care, we propose an innovative subsidy scheme in which governments do not commit the subsidy amount in advance but determine it by the end of the subsidy period. The performance of the traditional and proposed subsidy schemes is evaluated in an oligopoly without competition, where each manufacturer decides its product quality and production quantity under the diseconomies of scale in production. Both types of schemes can take into account product quality or not. Our results show that compared to the traditional scheme, the proposed scheme drives manufacturers to reduce production quantity but improves product quality and brings them higher profits. Furthermore, the scheme results in greater social welfare when the subsidy budget is large. Finally, we conduct robustness checking by considering the market competition and absence of the diseconomies of scale, respectively. The result shows that the main findings in the basic model continue to hold, while there are additional findings. In the first scenario, as the market competition intensity increases, our proposed scheme becomes more preferable to the manufacturers and the government. In the second scenario, subsidy schemes that take product quality into account are never preferable.