Subsidies

A grant given to firms by the government to a certain industry to keep the price of a product low.

Aims to:

• Reduce cost of production

• Increase output

• Solve market failures - encourage more consumption with things that benefit society e.g: public transportation, vaccines etc

• Encourage affordability of necessities - makes essentials accessible for low income households

Can do more harm than good as people in poor countries cannot compete with Western prices

Example:

• Job Retention Scheme - helped employers pay worker’s wages if they were unable to work during the pandemic