Questions tagged [subsidies]

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Is there a name for the phenomenon where a company supposedly in industry A actually gets most of its revenue from industry B?

McDonald's is a fast food company, but actually gets most of its revenue from real estate. Similarly, Hong Kong's Mass Transit Railway (MTR) makes >50% of its revenue from real estate, rather than ...
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How do perpetual bonds help the banks fulfill their capital requirements?

This is a follow-up question to Loans that don't have to be paid back (only the interest). In the Wikipedia article on perpetual bonds one reads "Most perpetual bonds issued in the present day ...
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Loans that don't have to be paid back (only the interest)

A normal loan has to be paid back with interest. Every now and then there are interest-free loans where only the loan has to be paid back but no interest, e.g. among relatives or friends, but also as ...
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2 votes
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Solving for the efficient subsidy amount with an externality

I am dealing with a problem that is set up as follows: Actors A and B get utility from consumption ($c_i$) and disutility from safety measures ($s_i$), however their chance of getting sick is reduced ...
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Why agricultural subsidies were targeted in 1991 Indian Economic Liberalization

In the book Half - Lion: How P.V Narasimha Rao Transformed India, the author mentions that one of the contentious reforms for 1992 were agricultural subsidy reforms. I don't understand how is this ...
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Why could a CO2 producer in the UK not just increase its price to match input price increases?

I'm confused about this UK story of the need for government intervention to "bail out" a CO2 producer: The UK government has agreed to subsidize a major US fertilizer manufacturer at a cost ...
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1 answer
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How to show consumer subsidy (rebate) on supply and demand diagram?

I am currently working on an assignment and needed some help. My assignment requires me to find an article relating to a form of government intervention such as taxes or subsidies and analyse the ...
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I don't understand how a graph would look like for this situation

If there is a negative production externality of agriculture which is water wastage, and the government provides a 100% subsidy to the farmers so they can buy irrigation gadgets to reduce water ...
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Subsidies as incentives

The given explanation about how subsidies unintentionally can result in resources being wasted does make sense to me. However, I just wanted a second opinion on my take on this. To me, it seems like a ...
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3 answers
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Why does lowering the value of yuan against the USD disadvantage the US and benefit China

In this article : https://www.epi.org/blog/trumps-china-tariff-confusion-it-wont-solve-chronic-trade-deficits/ they claim that depreciating the value of the yuan to the USD bolstered China’s economy. ...
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Can a rescue package be considered as a subsidy to the industry?

In the BBC article, France announces €8bn rescue plan for car industry, it is mentioned that the car industry will be given a rescue package to avoid unemployment. Would this be considered as a ...
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Is there a standard term for this tradeoff when subsidizing: inducing dependence vs providing support?

I've often heard it informally argued "people will become lazy if you give them handouts". Although I doubt the economic sophistication of most such assertions, I do think they have a real point: you ...
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Can there exist something that subsidises that is not a subsidy

Is the set of subsidies exactly the same as the set of things that subsidise? Put another way: can there exist something that subsidises that is not a subsidy? Or are there two definitions of a ...
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Why does China spend so much on agricultural/farming subsidies?

I use the OECD's Total Support Estimates (TSE), which I think is a proper measure of total agricultural subsidies (but correct me if I'm wrong). China's TSE is by far the largest at \$239B in 2017 ...
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1 answer
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What are production limiting programmes?

Under WTO domestic support norms, blue box measures include: Direct payments under production limiting programmes (often referred to as “Blue Box” measures) are exempt from commitments if such ...
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Welfare status when a positive externality is subsidised

I was wondering if there is still welfare loss for example there is a positive externality in production of a good and the government decides to subsidise the good? I think it does still have ...
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3 votes
1 answer
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Is undervaluing environmental impact a subsidy?

This is in relation to a recent question on skeptics which to me seems to broil down to whether you accept that form of accounting, i.e. consider undervaluing environmental impact a hidden subsidy. ...
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1 answer
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How to find the market equilibrium by surplus maximisation when there is a consumer subside?

Let's assume a market with linear demand and supply functions, let's say $Q_d = 20 - 4p$ and $Q_s = -4 +8p$ respectively. We can easily find the market equilibrium by either setting $Q_d = Q_s$ (or $...
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How is it possible that shipping of eBay items from China to US is 'free'?

How is it possible that Chinese vendors are able to ship a small / light $3 part to a doorstep in the US for free? When shipping items the opposite way via USPS it is often greater than the cost of ...
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1 answer
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How are petro states able to maintain gasoline subsidies without black market export smuggling?

I don't understand how petro states can have crazy low gasoline prices without smugglers exporting the gasoline and selling it elsewhere. For example, in Venezuela the domestic price of gasoline is ...
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2 votes
2 answers
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Why does the European Union give subsidies to farmers?

According to neoclassical economics, subsidies are a solution to correct for the existence of externalities in consumption or production. What is the economic rationale/justification for such ...
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4 votes
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How does the U.S agriculture subsidy not constitute export subsidies under the WTO?

The WTO explicitly prohibits subsidies on export goods to prevent dumping and market distortion but the United States spends $2.4 Billion annually on corn subsidies ...
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4 votes
2 answers
2k views

Does China subsidize its exports?

And if so, to what extent? Also, how does the extent of China's subsidies compare internationally? (I understand this is a broad question but I can imagine that some economists somewhere have come ...
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1 vote
1 answer
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why subsidy is given why not govt direct discount the prices? [closed]

I have a great confusion about the fundamental of subsidy . Why government give subsidy when it can also discount the price but it doesn't do so ?
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Price Floors and Subsidies

Why would a government choose to impose a price floor for agricultural commodities when subsidies would prove to be more beneficial for not only consumers, but also the government itself, since they ...
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2 votes
1 answer
2k views

Calculating the impact of a per-unit Subsidy given to Consumers?

I am somewhat confused about the concept of calculating the prices payed by consumers and producers after a subsidy has been applied. For example, say a good is being traded at 100 dollar at the ...
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6 votes
4 answers
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Do the donated NFL losing team shirts destroy local economies?

I've recently become aware of the fact that the NFL prints both championship teams' shirts in advance to satiate incredible demand -- but instead of destroying the losing teams' shirts like they used ...
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4 votes
1 answer
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Are there economic policies that help countries fight corruption?

Are there particular taxes or subsidies or public goods that a country's economic authority could implement to help in the fight against corruption? While the rule of law seems to be the first order ...
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