Distribution by Scientific Domains
Distribution within Business, Economics, Finance and Accounting

Kinds of Subsidies

  • agricultural subsidy
  • earning subsidy
  • export subsidy
  • government subsidy
  • production subsidy
  • public subsidy
  • r&d subsidy
  • wage subsidy

  • Terms modified by Subsidies

  • subsidy system

  • Selected Abstracts


    This paper shows that subsidy can naturally emerge as part of the equilibrium strategy of an innovator of a cost-reducing innovation in a Cournot oligopoly when the innovator is endowed with combinations of upfront fee and royalty. It is further shown that there are robust regions where the social welfare is higher in subsidy-based licensing compared to the regime where licensing involving subsidy is not allowed. The analysis is carried out for both outsider and incumbent innovators. [source]


    ECONOMIC INQUIRY, Issue 3 2007
    This paper studies investment in health and human capital in a life cycle model. Health investment enhances survival to old age by improving health from its endowed level. The model predicts two distinctive phases of development. When income is low enough, the economy has no health investment and little savings, leading to slow growth. When income grows, health investment will become positive and the saving rate will rise, leading to higher life expectancy and faster growth. A health subsidy can move the economy from the first phase to the next. Subsidies on health and human capital investments can improve welfare. (JEL I00, J10, H50, O10) [source]

    The Effect of R&D Subsidies on Private R&D

    ECONOMICA, Issue 294 2007
    This paper investigates the relationship between government support for R&D and R&D expenditure financed privately by firms using a comprehensive plant level data set for the manufacturing sector in the Republic of Ireland. We find that for domestic plants small grants serve to increase private R&D spending, while too large a grant may crowd out private financing of R&D. In contrast, evidence for foreign establishments suggests that grant provision causes neither additionality nor crowding out effects of private R&D financing, regardless of the size of the subsidy. [source]

    Coping with Rational Prodigals: A Theory of Social Security and Savings Subsidies

    ECONOMICA, Issue 289 2006
    The rational prodigality argument, which often serves to justify social security, is considered in a second-best tax framework with endogenous labour supply. Rational prodigality renders the familiar policies time-inconsistent. I analyse time-consistent policies and show that a wage tax suffices to rule out prodigality as a rational strategy. However, by using savings subsidies the solution can be improved upon. The subsidies are shown to be decreasing in income. A social security system with increasing contributions is not needed in either case. [source]

    Campaign Contributions and Agricultural Subsidies

    ECONOMICS & POLITICS, Issue 3 2001
    Rigoberto A. Lopez
    This article examines the influence of campaign contributions on agricultural subsidies. Empirical results revealed that rent-seeking works, i.e. contributions, influence agricultural subsidies in the manner they best serve contributors' economic interests. Eliminating campaign contributions would significantly decrease agricultural subsidies, hurt farm groups, benefit consumers and taxpayers, and increase social welfare by approximately $5.5 billion. Although contributions are not the only determinants of agricultural subsidies, investment returns to farm PAC contributors are quite high ($1 in contributions brings about $2,000 in policy transfers). In fact, the results are in sharp contrast to the "truthful contributions" assumption of the Grossman,Helpman model. [source]

    Counterpoint:CAP Reform in the Dairy Sector: Remove Export Subsidies and Retain Milk Quota-Counterpoints and Reply

    EUROCHOICES, Issue 3 2004
    David Harvey
    No abstract is available for this article. [source]

    CAP Reform in the Dairy Sector: Remove Export Subsidies and Retain Milk Quota

    EUROCHOICES, Issue 2 2004
    Zohra Bouamra-Mechemache
    Summary CAP Reform in the Dairy Sector: Remove Export Subsidies and Retain Milk Quota The reforms of the Common Agricultural Policy of June 2003 introduced major policy changes, In the dairy sector the aim is to decrease price distortions between the EU and world dairy markets through successive reductions in milk intervention prices. However, the milk quota system is still in place and successive increases in milk quotas are planned. The question is whether these dairy reforms are going in the right direction given the three main characteristics of the EU dairy sector. First the price inelasticity of both milk supply (due to quota) and domestic demand means that price distortion mainly affects the distribution of economic surplus between consumers and producers but does not generate significant net losses in economic welfare. Second, the ,large country' position of the EU on the world market means that the EU should remove all export subsidies, which will reduce EU exports and increase world prices. Third, the projected increase in EU aggregate demand for milk favours a reduction in all subsidies. The CAP is going in the right direction in the dairy sector. But to reduce price distortions all subsidies should be removed as soon as possible and the milk production quota should be retained. La réforme de la PAC laitiére: supprimer les subventions aux exportations et conserver les quotas La réforme de la PAC en juin 2003 est un changement majeur. En ce qui concerne le secteur laitier, l'idée consiste à diminuer les distorsions entre les prix européens et ceux du marché mondial par une série de réductions progressives du prix d'intervention. En même temps, le système des quotas reste en place et des accroissements progressifs sont envisageés pour les droits à produire. La question. est alors de savoir si une telle politique est bien orientée, compte tenu des trois caractéristiques principales du secteur laitier européen. En premier lieu, la faible élasticité-prix aussi bien de l'offre (à cause des quotas) que de la demande, implique que les distorsions, si elies affectent la répartition des bénéfices entre producteurs et consommateurs, ne génèrent pas de très grandes pertes sociales au niveau du bien-être global. Ensuite, l'importance de l'Union européenne sur les marchés mondiaux implique que l'UE doive réduire ses subventions à l'exportation, ce qui diminuera le volume des exportations et en fera remonter le prix, Enfin, l'accroissement prévisible de la demande globale européenne en produits laitiers devrait conduire G une réduction des subventions de toute sorte. La PAC est done sur la bonne voie en matière laitière. Mais pour réduire les distorsions, il faut le plus vite possible supprimer les subventions et conserver les quotas laitiers. Reform der GAP im Milchsektor: Abschaffung der Exportsubventionen und Beibehaltung der Milchquoten Die Reform der Gemeinsamen Agrarpolitik vom Juni 2003 führt zu erheblichen Politikänderungen. Im Milchsektor ist das Ziel, die Preisverzerrungen zwischen der EU und den Weltmärkten für Milchprodukte durch eine sukzessive Reduzierung der Milchinterventionspreise zu verringern. Das Milchquotensystem bleibt jedoch weiter bestehen und sukzessive Erhöhungen der Milchquoten sind geplant. Es ergibt sich die Frage, ob die Reform bei den vorhandenen drei Charakteristika im EU Milchsektor in die richtige Richtung geht. Erstens bedeuten das gegebene preisunelastische Angebot von Milch (wegen der Quotierung) und die Nachfrage im Inland, dass die Preisverzerrung sich vomehmlich auf die Verteilung der ökonomischen Rente zwischen Konsumenten und Produzenten auswirkt, nicht aber zu bedeutenden Wohlfahrtsverlusten führt. Zweitens fuhrt die Abschaffung aller Exporterstattungen für Milch und Milchprodukte dazu, dass die EU Exporte sinken und damit wegen der EU als relative großes Land die Weltmarktpreise für Milch steigen werden. Drittens begünstigt die vorausgesagte Zunahme in der aggregierten Milchnachfrage in der EU eine Reduzierung aller Subventionen. Die GAP entwickelt sich im Milchsektor in die richtige Richtung. Es sollten aber alle Subventionen so schnell wie möglich abgebaut und die Milchquote sollte aufrechterhalten werden, um Preisverzerrungen zu reduzieren. [source]

    Childcare Subsidies and the Transition from Welfare to Work,

    FAMILY RELATIONS, Issue 2 2004
    Sandra K. Danziger
    We address how childcare subsidies help in the welfare-to-work transition relative to other factors. We examine how the policy operates, whether childcare problems differ by subsidy receipt, and the effect of subsidy on work. Data are from a random sample panel study of welfare recipients after 1996. Findings show that subsidy receipt reduces costs but not parenting stress or problems with care. It predicts earnings and work duration net of other factors. Increased use of subsidies by eligible families and greater funding for child care would help meet the demand for this important support for working-poor families. [source]

    Measuring Housing Subsidies: Distortionary and Distributional Effects in the Netherlands

    FISCAL STUDIES, Issue 3 2003
    Harry Ter Rele
    Abstract This paper measures the distortionary and distributional effects of housing subsidies in the Netherlands. Its broad scope allows us to discuss the results in the light of the main justifications for subsidising housing, i.e. the merit,good argument, external effects and the distribution motive. Our measurements reveal some patterns of subsidisation that seem difficult to justify on these grounds. This applies especially to the differences between subsidisation of rental and owneroccupied housing and between mortgage, and equity,financed ownership. Moreover, the inelastic supply of housing in the Netherlands entails that subsidisation has only a limited effect on promoting housing quality. [source]

    Schooling, cognitive ability and health

    HEALTH ECONOMICS, Issue 10 2005
    M. Christopher Auld
    Abstract A large literature documents a strong correlation between health and educational outcomes. In this paper we investigate the role of cognitive ability in the health-education nexus. Using NLSY data, we show that one standard deviation increase in cognitive ability is associated with roughly the same increase in health as two years of schooling and that cognitive ability accounts for roughly one quarter of the association between schooling and health. Both schooling and ability are strongly associated with health at low levels but less related or unrelated at high levels. Estimates treating schooling as endogenous to health suggest that much of the correlation between schooling and health is attributable to unobserved heterogeneity; the causal effect of schooling on health is large only for respondents with low levels of schooling and low cognitive ability. An implication is that policies which increase schooling will only increase health to the extent that they increase the education of poorly-educated individuals. Subsidies to college education, for example, are unlikely to increase population health. Copyright © 2005 John Wiley & Sons, Ltd. [source]

    Presidential Address Agricultural Subsidies: Measurement and Use in Policy Evaluation

    Wilfrid Legg
    "There is no art which one government sooner learns of another than that of draining money from the pockets of the people.' (Adam Smith, The Wealth of Nations, 1776) [source]

    Taking Pressure Off Families: Child-Care Subsidies Lessen Mothers' Work-Hour Problems

    Julie E. Press
    We use the Philadelphia Survey of Child Care and Work to model the effect of child-care subsidies and other ecological demands and resources on the work hour, shift, and overtime problems of 191 low-income urban mothers. Comparing subsidy applicants who do and do not receive cash payments for child care, we find that mothers who receive subsidies are 21% less likely to experience at least one work hour,related problem on the job. Our results suggest that child-care subsidies do more than allow women to enter the labor force. Subsidies help make it easier for mothers in low-wage labor both to comply with employer demands for additional work hours and to earn the needed wages that accompany them. [source]

    Capital Subsidies and their Impact on Total Factor Productivity: Firm-Level Evidence from Northern Ireland,

    Richard Harris
    Many studies have tried to assess the impact of such assistance, but without the counterfactual evidence it is difficult to ascertain whether or not such support does improve performance. The aim of this paper is to use a unique matched data set to establish if such assistance has made a difference to total factor productivity in Northern Ireland manufacturing plants. [source]

    Countervailing Duties, Foreign Export Subsidies and Import Tariffs

    Yu-Ter Wang
    Given that countervailing duties and import tariffs are set in different ways and for different purposes, I re-examine the relationship between countervailing duties, foreign export subsidies and import tariffs under imperfect competition. I find that (i) the optimal countervailing duty depends on the existing import tariff level; (ii) the optimal import tariff is so high that the optimal countervailing duty is zero and hence foreign export subsidization occurs; and (iii) it is more likely for countervailing duties to be imposed on a foreign firm whose government takes no action when other foreign countries reduce or eliminate their subsidies on exports. [source]

    Do R&D Subsidies Stimulate or Displace Private R&D?

    Evidence from Israel
    In evaluating the effect of an R&D subsidy we need to know what the subsidized firm would have spent on R&D had it not received the subsidy. Using data on Israeli manufacturing firms in the 1990s we find evidence suggesting that the R&D subsidies granted by the Ministry of Industry and Trade greatly stimulated company financed R&D expenditures for small firms but had a negative effect on the R&D of large firms, although not statistically significant. One subsidized New Israeli Shekel (NIS) induces 11 additional NIS of own R&D for the small firms. However, because most subsidies go to the large firms a subsidy of one NIS generates, on average, a statistically insignificant 0.23 additional NIS of company financed R&D. [source]

    R&D Subsidies versus R&D Cooperation in a Duopoly with Spillovers and Pollution

    Emmanuel Petrakis
    We introduce pollution, as a by-product of production, into a non-tournament model of R&D with spillovers. Technology policy takes the form of either R&D subsidisation or pre-competitive R&D cooperation. We show that, when the emissions tax is exogenous, the optimal R&D subsidy can be negative, i.e. there should be a tax on R&D, depending on the extent of the appropriability problem and the degree of environmental damage. In a wide class of cases, depending on the parameter values, welfare in the case of R&D cooperation, is lower than welfare in the case of R&D subsidisation. [source]

    Do environmental social controls matter to Australian capital investment decision-making?

    Donald G. Ross
    Abstract This paper looks at how environmental social controls (ESCs), namely mandatory disclosure, regulation, subsidies and stakeholder opinion, are perceived in terms of their relative importance by Australian capital investment managers. We find that regulation and stakeholder opinion are the most important ESCs. Subsidies generally have less influence, while mandatory disclosure has almost no impact on capital investment decisions. However, even the more important ESCs have much less than impact than mainstream financial and strategic factors. Policy makers seeking to influence capital investment managers will have to increase the power levels of the various ESCs if they are to change behaviour. Copyright © 2008 John Wiley & Sons, Ltd and ERP Environment. [source]

    Estimating the Effects of a Time-Limited Earnings Subsidy for Welfare-Leavers

    ECONOMETRICA, Issue 6 2005
    David Card
    In the Self Sufficiency Project (SSP) welfare demonstration, members of a randomly assigned treatment group could receive a subsidy for full-time work. The subsidy was available for 3 years, but only to people who began working full time within 12 months of random assignment. A simple optimizing model suggests that the eligibility rules created an "establishment" incentive to find a job and leave welfare within a year of random assignment, and an "entitlement" incentive to choose work over welfare once eligibility was established. Building on this insight, we develop an econometric model of welfare participation that allows us to separate the two effects and estimate the impact of the earnings subsidy on welfare entry and exit rates among those who achieved eligibility. The combination of the two incentives explains the time profile of the experimental impacts, which peaked 15 months after random assignment and faded relatively quickly. Our findings suggest that about half of the peak impact of SSP was attributable to the establishment incentive. Despite the extra work effort generated by SSP, the program had no lasting impact on wages and little or no long-run effect on welfare participation. [source]

    Crunch Time: A Policy to Avoid the ,Announcement Effect' when Terminating a Subsidy

    Marc Gürtler
    Irreversibility; investment; announcement effect; subsidy; tax Abstract. If the government announces the termination of a subsidy paid for an irreversible investment under uncertainty, investors might decide to realize their investment so as to obtain the subsidy. These investors might have postponed an investment if future payment were assured. Depending on the degree of uncertainty and the time preference, the termination of the subsidy might cost the government more in toto than granting the subsidy on a continuing basis. A better strategy would be to reduce the subsidy in parts rather than to terminate the subsidy in its entirety. [source]

    The Choice of Optimal Protection under Oligopoly: Import Tariff v. Production Subsidy

    Tsuyoshi Toshimitsu
    Economists researching the area of optimal protection have tended to analyse the ranking of alternative policy tools in the presence of perfect competition, either when the government in an importing country achieves a non-economic target, or when there is a market distortion. Assuming international oligopolistic competition, I reconsider the choice of optimal policy instruments, i.e. an import tariff and a production subsidy. I show that the choice of optimal policy instruments depends on the relative number of home firms and foreign ones and on the magnitude of international cost differences. JEL Classification Numbers: F12, F13. [source]


    This paper discusses the link between R&D and productivity across the European industrial and service sectors. The empirical analysis is based on both the European sectoral OECD data and on a unique micro-longitudinal database consisting of 532 top European R&D investors. The main conclusions are as follows. First, the R&D stock has a significant positive impact on labor productivity; this general result is largely consistent with previous literature in terms of the sign, the significance, and the magnitude of the estimated coefficients. More interestingly, both at sectoral and firm levels the R&D coefficient increases monotonically (both in significance and magnitude) when we move from the low-tech to the medium- and high-tech sectors. This outcome means that corporate R&D investment is more effective in the high-tech sectors and this may need to be taken into account when designing policy instruments (subsidies, fiscal incentives, etc.) in support of private R&D. However, R&D investment is not the sole source of productivity gains; technological change embodied in gross investment is of comparable importance on aggregate and is the main determinant of productivity increase in the low-tech sectors. Hence, an economic policy aiming to increase productivity in the low-tech sectors should support overall capital formation. [source]


    The article considers the optimal research and development subsidy regime in a two-firm two-country model where each firm is "located" in a specific country. Trade is intra-industry in that customers in both countries purchase from both firms. The article suggests that when both countries subsidize their local firm usually welfare increases compared to the case of zero subsidies. Making the same comparison, profit always falls in the symmetric game and falls about half the time in the asymmetric game. These results call into question some common notions about corporate welfare. (JEL O38, H25, F23) [source]


    Recent research shows that the dramatic rise in obesity in the United States is due more to the overconsumption of unhealthy foods than underactivity. This study tests for an addiction to food nutrients as a potential explanation for the apparent excessive consumption. A random coefficients (mixed) logit model is used to test a multivariate rational addiction model. The results reveal a particularly strong addiction to carbohydrates. The implication of this finding is that price-based policies, sin taxes, or produce subsidies that change the expected future costs and benefits of consuming carbohydrate-intensive foods may be effective in controlling excessive nutrient intake. (JEL D120, I120, C230) [source]

    The Distribution of Subsidized Agricultural Credit in Brazil: Do Interest Groups Matter?

    Steven M. Helfand
    This article examines the unequal distribution of credit and credit subsidies in the Brazilian agricultural sector from 1969 to 1990. Total credit subsidies exceeded US$ 40 billion in this period. The distribution across crops is studied econometrically. After controlling for area, the crops that benefited most had superior access to credit institutions, were tradeable, had high prices, and were not perennials. Proxies for collective action by crop were an unimportant determinant of credit policy, while a bias in favour of large producers was evident. Alternative explanations for this bias are discussed, including collective action by farm size and transaction costs in lending. [source]

    Mental health care reform in Sweden, 1995

    C.-G. Stefansson
    Objective:,To describe the content of the Community Mental Health Care reform in Sweden, in effect from 1995 and directed to severely mentally ill people (SMI). Method:,Evaluating changes, at local and national level, in living conditions among SMI and resources of services directed to them, by using registers, questionnaires, interviews and case studies. Results:,A survey, covering 93% of the population, identified 43 000 SMI (prevalence of 0.63%); 4000 long-stay patients and 400 rehabilitation programmes were transferred from psychiatric services to social services (15% of the budget of psychiatric services). Employment and rehabilitation projects, family support and user programmes and educational projects for social services staff, were launched (funded by state subsidies). Conclusion:,SMI still have difficulties in obtaining adequate support on the basis of disability laws and there continue to be barriers between social services and psychiatric services. [source]

    Spillover edge effects: the dispersal of agriculturally subsidized insect natural enemies into adjacent natural habitats

    ECOLOGY LETTERS, Issue 5 2006
    Tatyana A. Rand
    Abstract The cross-edge spillover of subsidized predators from anthropogenic to natural habitats is an important process affecting wildlife, especially bird, populations in fragmented landscapes. However, the importance of the spillover of insect natural enemies from agricultural to natural habitats is unknown, despite the abundance of studies examining movement in the opposite direction. Here, we synthesize studies from various ecological sub-disciplines to suggest that spillover of agriculturally subsidized insect natural enemies may be an important process affecting prey populations in natural habitat fragments. This contention is based on (1) the ubiquity of agricultural,natural edges in human dominated landscapes; (2) the substantial literature illustrating that crop and natural habitats share important insect predators; and (3) the clear importance of the landscape matrix, specifically distance to ecological edges, in influencing predator impacts in agroecosystems. Further support emerges from theory on the importance of cross-boundary subsidies for within site consumer,resource dynamics. In particular, high productivity and temporally variable resource abundance in agricultural systems are predicted to result in strong spillover effects. More empirical work examining the prevalence and significance of such natural enemy spillover will be critical to a broader understanding of fragmentation impacts on insect predator,prey interactions. [source]

    Subsidized Island Biogeography Hypothesis: another new twist on an old theory

    ECOLOGY LETTERS, Issue 4 2001
    W.B. Anderson
    We present a new hypothesis for predicting and describing patterns of species diversity on small islands and habitat fragments. We have modified the traditional island biogeography equilibrium theory to incorporate the influence of spatial subsidies from the surrounding matrix, which vary among islands and habitat fragments, on species diversities. The modification indicates three possible directions for the effects of spatial subsidies on diversity, which depend on where the focal community falls on the hypothesized unimodal curve of the productivity,diversity relationship. The idea is novel because no recent syntheses of productivity,diversity,area relationships examine the role of allochthonous resources on recipient communities' diversity patterns. [source]

    Functional response and size-dependent foraging on aquatic and terrestrial prey by brown trout (Salmo trutta L.)

    P. Gustafsson
    Gustafsson P, Bergman E, Greenberg LA. Functional response and size-dependent foraging on aquatic and terrestrial prey by brown trout (Salmo trutta L.).Ecology of Freshwater Fish 2010: 19: 170,177. © 2010 John Wiley & Sons A/S Abstract ,, Terrestrial invertebrate subsidies are believed to be important energy sources for drift-feeding salmonids. Despite this, size-specific use of and efficiency in procuring this resource have not been studied to any great extent. Therefore, we measured the functional responses of three size classes of wild brown trout Salmo trutta (0+, 1+ and ,2+) when fed either benthic- (Gammarus sp.) or surface-drifting prey (Musca domestica) in laboratory experiments. To test for size-specific prey preferences, both benthic and surface prey were presented simultaneously by presenting the fish with a constant density of benthic prey and a variable density of surface prey. The results showed that the functional response of 0+ trout differed significantly from the larger size classes, with 0+ fish having the lowest capture rates. Capture rates did not differ significantly between prey types. In experiments when both prey items were presented simultaneously, capture rate differed significantly between size classes, with larger trout having higher capture rates than smaller trout. However, capture rates within each size class did not change with prey density or prey composition. The two-prey experiments also showed that 1+ trout ate significantly more surface-drifting prey than 0+ trout. In contrast, there was no difference between 0+ and ,2+ trout. Analyses of the vertical position of the fish in the water column corroborated size-specific foraging results: larger trout remained in the upper part of the water column between attacks on surface prey more often than smaller trout, which tended to seek refuge at the bottom between attacks. These size-specific differences in foraging and vertical position suggest that larger trout may be able to use surface-drifting prey to a greater extent than smaller conspecifics. [source]


    ECONOMIC AFFAIRS, Issue 3 2003
    Paul Klumpes
    This paper applies a stakeholder perspective to estimate various types of costs (taxes) and benefits (subsidies) affecting stakeholder groups whose constituents are most affected by recent, major reforms to the public regulation of the UK pensions industry. Both direct and indirect subsidies and taxes arising from regulation distinguishes groups representing both sophisticated and vulnerable investors. The analysis suggests that financial intermediaries, and industry regulators, are all effectively subsidised by other stakeholder groups. [source]

    Taxation, warfare, and the early fourteenth century ,crisis' in the north: Cumberland lay subsidies, 1332,13481

    Recent research into the impact of Anglo-Scottish conflict on northern England's economy has become increasingly sophisticated, using local estate accounts to enhance understanding of the role of war in the 'crisis' of the early fourteenth century. Yet taxation data also remains an important source on these issues, not least because of its wide geographical coverage. Using a rich series of lay subsidy documents for Cumberland, this article concludes that the direct impact of Scottish raids was only one of several determinants of economic fortunes. More significantly, reconstructing the process of taxation shows that non-violent resistance to state levies was as responsible as war damage for a decline in revenue from the county. [source]