noun \ˈsəb-sə-dē, -zə-\

: money that is paid usually by a government to keep the price of a product or service low or to help a business or organization to continue to function

plural sub·si·dies

Full Definition of SUBSIDY

:  a grant or gift of money: as
a :  a sum of money formerly granted by the British Parliament to the crown and raised by special taxation
b :  money granted by one state to another
c :  a grant by a government to a private person or company to assist an enterprise deemed advantageous to the public

Examples of SUBSIDY

  1. The city is increasing subsidies for public transit.
  2. <government subsidies for farmers in case of crop failure>

Origin of SUBSIDY

Middle English subsidie, from Anglo-French, from Latin subsidium reserve troops, support, assistance, from sub- near + sedēre to sit — more at sub-, sit
First Known Use: 14th century

Other Economics Terms

actuary, compound interest, globalization, indemnity, portfolio, rentier, stagflation, usurer


noun    (Concise Encyclopedia)

Financial assistance, either through direct payments or through indirect means such as price cuts and favourable contracts, to a person or group in order to promote a public objective. Subsidies to transportation, housing, agriculture, mining, and other industries have been instituted on the grounds that their preservation or expansion is in the public interest. Subsidies to the arts, sciences, humanities, and religion also exist in many nations where the private economy is unable to support them. Examples of direct subsidies include payments in cash or in kind, while more-indirect subsidies include governmental provision of goods or services at prices below the normal market price, governmental purchase of goods or services at prices above the market price, and tax concessions. Although subsidies exist to promote the public welfare, they result in either higher taxes or higher prices for consumer goods. Some subsidies, such as protective tariffs, may also encourage the preservation of inefficient producers. A subsidy is desirable only if its effects increase total benefits more than total costs (see cost-benefit analysis).


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