A subsidy monies usually paid by a government to keep the price of a product or service low or to help a business or organization to continue to function.
A subsidy is a form of welfare support for particular sectors and industries of a nation’s economy. The idea is to assist struggling businesses by lowering the costs placed on them. Subsidies are also used to encourage new research and developments within an industry or sector. Usually, subsidies are the result of failures of a free market system to support individual segments of an economy. The problem is that subsidies can also affect the fairness of international trade deals.<< Back to Glossary Index