Selective Promotion of Industries and Picking Winners

Can export subsidies raise domestic welfare even when the government does not know how pro\u85t-shifting potential varies by industry? If many oligopolies all use a factor available in \u85xed supply, the government needs to give larger export subsidies to industries with larger pro\u85t-shifting poten-tial. Although the government cannot tell how industries di¤er, suppose the industries do know how much each subsidy level will increase their pro ts. If each industry can lobby the government over the level of subsidy received, the equilibrium matches the allocation of subsidies under full in-formation. Lobbying reveals the information required to properly allocate subsidies across industries