Effects of Subsidies on Resource Allocation
The previous chapter not only provided the data illustrating the cross-industry pattern of government aid. It also identified a number of activities subsidized by individual programmes. The present chapter attempts to provide a theoretical framework within which to analyse the effects on resource allocation of the subsidization of these activities. In doing so, it is necessary occasionally to draw upon the empirical results of other studies of individual types of subsidy.
KeywordsCapital Stock Public Subsidy Investment Incentive Trade Effect Production Subsidy
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