Subsidies can take the form of cash payments or tax breaks or low-interest loans that are secured. Subsidies are aimed at achieving the achievement of a specific economic objective or a political or a social goal. However, subsidies can also be harmful and can hinder more efficient public spending.

Substitutes may be considered a reverse tax since they offer money to people or businesses to engage in a particular type of activity instead of charging them for it (for instance tax incentives or free student loans). Governments frequently provide subsidies to products and activities due to their economic and environmental advantages.

Governments could, for example provide subsidies for the production and use of renewable energy via tax breaks that encourage its use. They may also require utilities to purchase this energy. Or, they can subsidize housing costs by giving people a loan or grant that covers a portion of the cost of renting or purchasing homes. This allows more people to reside in an area that they could not afford otherwise.

Subsidy schemes have a variety of goals, but generally, they are designed to meet a national strategic goal or gain a competitive advantage on international markets. In other instances, they are designed to compensate for weaknesses in the structure or natural in a domestic economy. For example, producer subsidies in agriculture help to support prices for farmers above the prices of imported food. These kinds of subsidies can lead to a distortion myrrdin-inc.com/2021/07/08/generated-post/ of the market price and a misallocation or scarce resources.