Policy
Subsidy
Regulation
As A increases, subsidy is net transfer from small to large firms
becomes more fiscally onerous, discourages entry, and lowers GDP
Benchmark
A = 5
psi = 0.05
Subsidy rate
0.00
Zoom y-axis
Low homogeneous floor binds small/medium firms
progressive requirements increasingly bind large firms
Benchmark
A = 5
psi = 0.05
Required
Unregulated
Reference requirement (r̄
req
)
0.00%
Progressivity (η
reg
)
0.00
Zoom y-axis
Effective policy
raises cyber investment among firms that
underinvest
,
avoids forcing
already protected firms
to overinvest.