Distortionary Effects of PPP Loans on Business Competition: Evidence From the Hotel Industry

dc.contributor.author	Steiner, Eva
dc.contributor.author	Tchistyi, Alexei
dc.date.accessioned	2024-09-13T17:52:27Z
dc.date.available	2024-09-13T17:52:27Z
dc.date.issued	2024-09-13
dc.description.abstract	The Covid-19 pandemic that emerged in 2020 caused a deep, global economic crisis that was especially difficult for the hotel industry. The U.S. government responded to this crisis with an emergency set of economic relief measures on a near-unprecedented scale. The Small Business Administration’s $953-billion Payroll Protection Program (PPP) was a key part of that response. In an effort to reduce layoffs, the PPP offered temporary payroll subsidies in the form of forgivable loans for small businesses. Given the significant cost involved, it is important to evaluate the economic impact of the PPP initiative. While the program was clearly beneficial for businesses that received PPP funds, we found a potential unintended consequence of the PPP—namely, the distortion of business competition. Our study assesses how equilibrium market outcomes change when firms benefiting from government subsidies compete against non-subsidized firms.
dc.identifier.uri	https://hdl.handle.net/1813/115535
dc.rights	Attribution 4.0 International	en
dc.rights.uri	http://creativecommons.org/licenses/by/4.0/
dc.subject	PPP loans
dc.subject	hotels
dc.subject	subsidies
dc.title	Distortionary Effects of PPP Loans on Business Competition: Evidence From the Hotel Industry
dc.type	article

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