▁mon opol y ▁profit ▁as ▁well ▁as ▁the ▁w ages ▁paid ▁to ▁the ▁firm ' s ▁workers ; ▁the ▁results ▁are ▁qual it atively ▁the ▁same ). ▁It ▁can ▁be ▁shown ▁that ▁the ▁profit ▁function ▁evaluated ▁at ▁equilibrium ▁quantity ▁levels ▁is ▁con ca ve ▁in ▁s ▁and ▁eventually ▁neg atively ▁s loped . ▁As ▁a ▁result , ▁there ▁is ▁an ▁" opt imal ▁subs id y " ▁which ▁maxim izes ▁the ▁domestic ▁firm ' s ▁prof its ▁and ▁hence ▁domestic ▁social ▁w elf are . ▁As ▁it ▁turns ▁out , ▁if ▁the ▁government ▁sets ▁the ▁subs id y ▁exactly ▁at ▁the ▁optimal ▁level , ▁the ▁resulting ▁equilibrium ▁is ▁the ▁same ▁as ▁that ▁of ▁the ▁" le ader ▁and ▁follow er " ▁Stack el berg ▁model . ▁In ▁that ▁case ▁one ▁of ▁the ▁fir ms ▁( in ▁this ▁case ▁the ▁domestic ▁firm ) ▁has ▁the ▁ability ▁to ▁choose ▁its ▁output ▁first . ▁This ▁creates ▁the ▁ability ▁to ▁cred ibly ▁commit ▁to ▁a ▁particular ▁action , ▁resulting ▁in ▁" first ▁m over ▁advantage ". ▁In ▁the ▁Br ender – S pen cer ▁model , ▁the ▁government ' s ▁subs id y ▁creates ▁this ▁cred ible ▁commit ment ▁even ▁when ▁the ▁private ▁firm ▁does ▁not ▁have ▁that ▁ability . ▁ ▁Ext ensions ▁ ▁Dom estic ▁consumption ▁of ▁export ▁good ▁ ▁In ▁standard ▁models ▁of ▁international ▁trade ▁a ▁fall ▁in ▁the ▁price ▁of ▁a ▁country ' s ▁export ▁good ▁– ▁a ▁d eter ior ation ▁in ▁its ▁terms ▁of ▁trade ▁– ▁generally ▁decre ases ▁the ▁home ▁country