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A subsidy is a direct or indirect payment to individuals or firms, usually in the form of a cash payment from the government or a targeted tax cut. In economic theory, subsidies can be used to offset market failures and externalities to achieve greater economic efficiency.

A subsidy by government offered to businesses enables them to keep prices of certain products lenient so that people can afford them. For instance, if a domestic company sells a product for $10 while its international competitor sells the same for $6, consumers will buy items from the latter.

Government subsidies are financial grants extended by the government to private institutions or other public entities, in order to stimulate economic activity or promote activities that are in the public good.

Subsidies are payments, tax breaks, or other forms of economic support given by governments to certain industries or economic sectors. The goal of subsidies is to aid or support what are deemed to be key parts of the economy or national infrastructure.

Subsidy Definition. A subsidy is a payment made to a firm or individual, made by the government for the purpose of increasing the purchase or supply of a specific good. Specific Subsidy.

Producer Impact of a Subsidy Therefore, producers are made better off by the subsidy. In general, consumers and producers share the benefits of a subsidy regardless of whether a subsidy is directly given to producers or consumers.

The objective of a subsidy is to encourage and improve economic activity. Through subsidies, the government makes goods and services available to consumers at reduced prices, thereby improving the state of the economy.

/?s?b.s?.da??ze?.??n/ the act by a government, organization, or other group of paying part of the cost of something: Some people oppose government subsidization of a baseball stadium. The Institute has taken the position that subsidization distorts markets and should be eliminated. See.