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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.

The subsidy may be a specific amount of money per unit of quantity of a good or service, or it may be calculated ad valorem as a specified percentage of the price per unit. A subsidy may also be calculated as the difference between a specified target price and the market price actually paid by a buyer.

A price for a product that is reduced because the government has paid part of the cost of producing it: Officials told farmers what to grow, bought their crops, and sold them at subsidized prices. (Definition of subsidized price from the Cambridge Business English Dictionary © Cambridge University Press)

A subsidy is money that is paid by a government or other authority in order to help an industry or business, or to pay for a public service.

Payments to both commercial firms and low-income individuals are examples of direct subsidies. This could include housing allowances, food vouchers for low-income families, or payments to private businesses as ?cash in the bank? payments.

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.

In the most general terms, a subsidy can be. defined as any government assistance that (i) allows consumers to purchase goods. and services at prices lower than those offered by a perfectly competitive private.