7 votes
Accepted

Is undervaluing environmental impact a subsidy?

Yes, undervaluing environmental impact is a subsidy, within the context of the IMF report that you are referring to. Here's what that report says in its abstract (my emphasis): it focuses on the ...
410 gone's user avatar
  • 8,158
6 votes
Accepted

Loans that don't have to be paid back (only the interest)

Classic example are the British consol bonds. British consol bonds are perpetuities so that means the principal never has to be paid back (although government could repurchase them on an open market). ...
1muflon1's user avatar
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5 votes
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Do the donated NFL losing team shirts destroy local economies?

My answer is no, it doesn't hurt the local economy. This seems like an example of the "Broken Window Fallacy": Suppose, when nobody is looking, I break all of the windows in my neighbour's house. ...
Ubiquitous's user avatar
  • 16.9k
5 votes

Does China subsidize its exports?

World Trade Organization (WTO) rules prohibit export subsidies and China joined the WTO almost 15 years ago (in December 2001). As a condition of membership, China had to eliminate export subsidies in ...
emeryville's user avatar
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4 votes
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Are there economic policies that help countries fight corruption?

Kaushik Basu has proposed (Why, for a Class of Bribes, the Act of Giving a Bribe should be Treated as Legal) legalizing paying bribes to separate the ties of criminality between the bribe payer and ...
BKay's user avatar
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3 votes
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How does the U.S agriculture subsidy not constitute export subsidies under the WTO?

Certain types of agricultural subsidies are permitted under the WTO's Green Box. These include direct income support for farmers, and environmental and regional development programmes. However the ...
Adam Bailey's user avatar
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3 votes
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Subsidies as incentives

The claim is definitely not trivial, otherwise we would not observe frequent draughts due to government subsidies (like drought in California that is at least partially caused by bad water and farming ...
1muflon1's user avatar
  • 56.4k
3 votes

Why does lowering the value of yuan against the USD disadvantage the US and benefit China

The article reflects a consensus view of the trade situation between US and China. Personally I see it differently : China has been willing to make and ship trillions of dollars’ worth of goods to ...
dm63's user avatar
  • 1,248
3 votes
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Calculating the impact of a per-unit Subsidy given to Consumers?

This is a great question which economists have a pretty good answer to. Let's first suppose the market is in an equilibrium with no intervention at price $P^*$. If there is a tax of value $t$ we ...
TwelvePikes's user avatar
2 votes
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How is it possible that shipping of eBay items from China to US is 'free'?

The major reasons that I understand are that: the Chinese government subsidizes shipping. the US Postal Service, eBay China, and Hong Kong Post office have a trilateral agreement called the ePacket ...
Kitsune Cavalry's user avatar
  • 6,628
2 votes

How are petro states able to maintain gasoline subsidies without black market export smuggling?

There has been rampant smuggling from Venezuela to Colombia - see links below. This is the basis for my question. http://www.wsj.com/video/colombia-black-market-gas-trade-/BC14C5B7-69A0-4A0E-84B2-...
John B's user avatar
  • 73
2 votes

Why does the European Union give subsidies to farmers?

The governments want to ensure that there is enough food for their people even if international food trade breaks down (for example due to trade war, war, or famine). A secondary objective is that ...
Klas Lindbäck's user avatar
2 votes

Why does the European Union give subsidies to farmers?

Markets are extremely poor at pricing events that have very low probability and catastrophic impacts. In part because we're very bad at estimating low-probability events: by definition, they're rare. ...
410 gone's user avatar
  • 8,158
2 votes

Do the donated NFL losing team shirts destroy local economies?

It Depends. We first need to decide on which country we are going to analyze. 1) If we look at the country producing the shirts, that country just spent the resources, labor, etc. to produce both ...
Mathematician's user avatar
2 votes

Do the donated NFL losing team shirts destroy local economies?

This isn't the case, because in the clothing market (much like in other markets) there is Product Differentiation. This is written on Investopedia as: Product differentiation is a marketing ...
EconJohn's user avatar
  • 8,345
2 votes

How to show consumer subsidy (rebate) on supply and demand diagram?

Let $x = D(p)$ be the demand for a good if the price is equals to $p$. The inverse demand curve (as you would draw it) is then given by $p = D^{-1}(x)$. It gives the price as a function of the ...
tdm's user avatar
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2 votes

I don't understand how a graph would look like for this situation

I suggest that the graph could be improved in two ways (apart from the point, which you seem to recognise, that the upward-sloping line labelled MSB should be labelled MPC (marginal private cost)). ...
Adam Bailey's user avatar
  • 8,369
2 votes
Accepted

What are production limiting programmes?

Subsidies are often primarily aimed at increasing the income of the agricultural sector When subsidies lead to increases in production, this can cause the market price to fall with negative effects ...
Henry's user avatar
  • 4,765
2 votes
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Why agricultural subsidies were targeted in 1991 Indian Economic Liberalization

I don't understand how is this even a reform, because as per this answer and the Wikipedia page for agricultural subsidies, developed countries are surely spending much more than India on per capita ...
1muflon1's user avatar
  • 56.4k
2 votes

Loans that don't have to be paid back (only the interest)

We were talking about such loans in one lecture, but in detail, we discussed interest-only mortgages. I have some notes on it and will write the info I have here; maybe, for someone, it will be ...
DavidHassel's user avatar
1 vote
Accepted

Term for intra-company or intra-country subsidy that's used to undercut competition in a different sector

The practice of one parts of business subsidizing another parts is known as cross-subsidization. However, this name is applied to the practice regardless of whether its done to undercut competition or ...
1muflon1's user avatar
  • 56.4k
1 vote

How do perpetual bonds help the banks fulfill their capital requirements?

Banks are required under Basel III to maintain sufficient capital buffer in case recession, like the Great Recession of 2008, hits. These capital buffers depend on how risky the assets (mostly loans ...
1muflon1's user avatar
  • 56.4k
1 vote

Loans that don't have to be paid back (only the interest)

In his comment to the original question user Paŭlo Ebermann gave me the right hint: I posed my question unclearly and did not mention that I were interested mainly in non-repayable loans with interest ...
Hans-Peter Stricker's user avatar
1 vote

Why could a CO2 producer in the UK not just increase its price to match input price increases?

I'm not an economist but let me add some chemical engineering background to the issue to explain the "why". They aren't really in the business as a "CO2 producer". Food-grade CO2 ...
TooTea's user avatar
  • 111
1 vote

Why could a CO2 producer in the UK not just increase its price to match input price increases?

I had exactly the same question, and it appears they now have done so. I’m not quite sure why government needed to be involved in negotiations here. The cost of CO2 will rise from £200 per ton to £...
Tim's user avatar
  • 148
1 vote
Accepted

Why does lowering the value of yuan against the USD disadvantage the US and benefit China

For the first question, in order to buy US assets, China sells yuan and buys dollars, which it can then use to purchase US assets (typically Treasuries). That increases the supply of yuan/demand for ...
Amaan M's user avatar
  • 224
1 vote
Accepted

Can a rescue package be considered as a subsidy to the industry?

It can be considered subsidy, especially if you are asking for the quoted passage. Although looking at it directly the subsidy seems to de jure be on the consumption (this being said some or maybe ...
1muflon1's user avatar
  • 56.4k
1 vote

Can there exist something that subsidises that is not a subsidy

My answer relies on two quotes. The first one: A rose by any other name would smell as sweet And the second one is from the definition of State Aid by the European Union's competition authority: ...
Giskard's user avatar
  • 29.5k
1 vote

Why does China spend so much on agricultural/farming subsidies?

The first thing that comes to mind is food security. China has a large population to feed and does not want to depend on foreign nations for its food. A (speculative) second reason may be ...
Maarten Punt's user avatar
  • 2,375
1 vote

How to find the market equilibrium by surplus maximisation when there is a consumer subside?

never work on weekends :-) What you really do here is to find the total surplus in terms of $Q*$ and then maximise it setting the derivative to $Q*$ equal to zero. So, you just maximise $$...
Antonello's user avatar
  • 307

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