Subsidy

A subsidy is the opposite of a tax. Governments that make domestic food staples or transportation available to their populations at reduced cost or below the cost of production or the cost of provision are examples of a subsidy. There are rules around subsidies when it comes to international trade. Producers in an industry that is receiving government subsidies dumping their subsidised products in another country at a cost below the cost of production in the second country becomes an illegal subsidy. In finance, certain governments make grant funding or subsidised financing available to companies engaged in R&D in preferential areas or, say, in the area of climate-change solutions via government guarantees on external funding or co-financing options.

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