@article{3e923f2fce5d478b89fe82915d21146d,
title = "There is a free lunch after all",
abstract = "This paper shows that there is a simple way for a financial institution to make a positive profit, free of risk, under imperfect competition. The institution plays a very limited role. It offers firms in the industry a per-unit subsidy in return for a predetermined upfront fee. It neither produces its own output nor sells the products of the subsidized firms. In equilibrium, firms accept the offer although they end up with lower net profits. The institution makes a positive profit as it collects upfront fees which exceed its subsidy payments. The resulting outcome in a Cournot industry is welfare improvement.",
keywords = "Cournot model, Free lunch, Subsidy, Welfare improvement",
author = "Liao, \{Chun Hsiung\} and Yair Tauman",
note = "Funding Information: The first author appreciates the partial financial support from the MOE Program for Promoting Academic Excellent of Universities under the grant number 91-H-FA08-1-4. We would like to thank anonymous referees and the associate editor of Mathematical Social Sciences for their valuable comments.",
year = "2004",
month = sep,
doi = "10.1016/j.mathsocsci.2004.02.002",
language = "אנגלית",
volume = "48",
pages = "223--233",
journal = "Mathematical Social Sciences",
issn = "0165-4896",
publisher = "Elsevier B.V.",
number = "2",
}