' s ▁w elf are . ▁In ▁the ▁Br ander – S pen cer ▁model ▁however ▁the ▁opposite ▁is ▁true . ▁This ▁is ▁because ▁in ▁this ▁model ▁the ▁mark ets ▁are ▁not ▁perfectly ▁compet itive ▁and ▁the ▁re venue ▁from ▁the ▁expanded ▁quantity ▁sold ▁compens ates ▁the ▁firm ▁for ▁the ▁re venue ▁lost ▁from ▁the ▁lower ▁export ▁price . ▁If ▁the ▁good ▁produced ▁by ▁the ▁firm ▁is ▁also ▁consum ed ▁dom est ically ▁however ▁the ▁result ▁is ▁a ▁bit ▁more ▁complicated . ▁In ▁the ▁case ▁where ▁the ▁firm ▁is ▁able ▁to ▁separate ▁the ▁home ▁and ▁export ▁market ▁( charge ▁different ▁prices ▁in ▁each ▁with ▁no ▁possibility ▁of ▁third ▁party ▁ar bit rage ) ▁then ▁the ▁level ▁of ▁the ▁optimal ▁subs id ies ▁will ▁depend ▁on ▁whether ▁marg inal ▁costs ▁of ▁production ▁are ▁constant , ▁increasing ▁or ▁decre asing . ▁The ▁optimal ▁subs id y ▁level ▁is ▁either ▁the ▁same , ▁higher ▁or ▁lower , ▁respectively , ▁compared ▁to ▁the ▁level ▁with ▁no ▁domestic ▁consumption . ▁This ▁unders c ores ▁the ▁need ▁on ▁the ▁part ▁of ▁the ▁government ▁for ▁very ▁precise ▁information ▁on ▁industry ▁structure ▁and ▁firm ' s ▁cost ▁functions . ▁ ▁In ▁the ▁more ▁general ▁case ▁where ▁the ▁firm ▁cannot ▁price ▁disc rim inate ▁between ▁domestic ▁and ▁foreign ▁consum ers ▁the ▁effects ▁of ▁a ▁subs id y ▁are ▁less ▁clear ▁since ▁both ▁an ▁expansion ▁of ▁exports ▁and ▁d eter ior ation ▁of ▁terms ▁of ▁trade ▁are ▁present . ▁However , ▁Br ender ▁and ▁Sp encer ▁show ▁that ▁starting ▁out ▁from ▁the ▁position