Interactive Glossary

BROWSE:

Subsidy:

A form of income re-distribution. This can be a direct grant to a private person or company to assist that entity (as with government payment to cover the charge for building a link that allows a customer to access the network). Or, it can be provided in the form of a reduced price for a regulated good or service. A subsidy can be transparent or it may be hidden, or not well understood. Often, those receiving subsidies are not low income citizens. A government subsidy may also be provided a supplier to cover costs of servicing high cost rural customers. Or, a uniform price to customers (regardless of the cost of service) will involve a cross-subsidy.

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