Direct Subsidies Research Articles

Bridging the Digital Divide: What Has Not Worked But What Just Might

America has spent billions trying to close the Digital Divide, but adoption disparities along many dimensions persist. The COVID pandemic has rekindled the strong interest in broadband adoption, with many in Congress now proposing to spend billions more to shrink the adoption gap. In this POLICY PAPER, we first offer an economic analysis of how best to spend broadband subsidies. As might be expected, the analysis prescribes that money should be spent where it is most effective (per dollar) at increasing adoption. Second, we offer an empirical analysis of past broadband adoption programs by quantifying the effect of several programs established by the American Reinvestment and Recovery Act of 2009. Applying a Difference-in-Differences model to Census data on adoption, we find no positive effect on home broadband adoption from programs funded by the Broadband Technology Opportunity Program (“BTOP”). Third, we discuss the potential benefits of direct subscriber subsidies considering the successful private sector programs offering low-cost broadband plans to low-income and other qualifying households. Direct subsidies to end-users will increase adoption, but surveys and empirical evidence prescribe sober expectations on their effectiveness at achieving universal adoption. Subsidizing broadband infrastructure deployment in unserved areas is a direct approach to increase broadband adoption, but even so the costs in some regions may outweigh the benefits.

Macro-environmental comparative analysis of e-mobility adoption pathways in France, Germany and Norway

The analysis of electric vehicle adoption pathways on a national level is a multi-dimensional problem, making adoption path analysis a complex task. The identification of successful strategies is however crucial for the decarbonization of the transport sector. This work provides an innovative analytical tool integrating a national adoption path identification framework and a macro-environmental STEPE (socio-cultural, technological, economic, political, environmental) approach.The method is tested at three countries: Norway, as the country with highest electric vehicle (EV) share globally, and France and Germany as two important European car-maker industries. When comparing France, Germany and Norway, the proposed framework allows raising the following main conclusions: Technology itself is not a decisive criteria. For the evolvement of a national EV production portfolio, the social value of the technology and the willingness of the incumbent car industry to position itself in this new market appear important. When EV are available in the market, regulatory incentives and policies have to match with consumer preferences. Among direct subsidies, policies affecting the purchase price of EV are identified as most effective instrument. The analysis further prompts a duality between national incentives and local programs supporting EV adoption. The final timeline analysis with Norway as forerunner and France and Germany as early adopters provides a detailed assessment of the temporal evolvement of national EV adoption pathways.

Authority–enterprise equilibrium based mixed subsidy mechanism for carbon reduction and energy utilization in the coalbed methane industry

As coalbed methane, the natural gas adsorbed in coal seams, is a greenhouse gas that is 21 times stronger than CO2, coalbed methane extraction significantly influences carbon reduction and energy conservation efforts. While the injection of CO2 into coal seams is known to effectively enhance coalbed methane recovery, this process has been limited because of high investment and production costs. Therefore, to promote the application of CO2 injection techniques in coalbed methane industry, this paper proposes an authority–enterprise equilibrium based mixed subsidy mechanism which combines direct subsidies with indirect tax-incentives. Specifically, a multi-objective bi-level programming model is established under uncertainty to assign a practical constraint and achieve a trade-off between the local authority and the coalbed methane plants. A practical case validates the feasibility and efficiency of the proposed method, proving that an authority–enterprise equilibrium based mixed subsidy mechanism is able to achieve carbon emissions reductions and conserve energy. Further analysis indicated that the marginal energy efficiency gains were greater than the authority costs under a strict energy utilization policy and that the environmental protection target had larger impacts on the coalbed methane plant performances.

Association between direct government subsidies and service scope of primary care facilities: a cross-sectional study in China

BackgroundComprehensive primary care practices, through preconception, preventive, curative, and rehabilitative care, have been a global priority in the promotion of health. However, the scope of primary care services has still been in decline in China. Studies on the factors for primary care service scope have centred on human resources and infrastructure; the role of direct government subsidies (DGS) on services scope of primary care facilities were left unanswered. This study aimed to explore the association between the DGS and services scope of primary care facilities in China.MethodsA multi-stage, clustered cross-sectional survey using self-administrated questionnaire was conducted among primary care facilities of 36 districts/counties in China. A total of 770 primary care facilities were surveyed with 757 (98.3%) valid respondents. Of the 757 primary care facilities, 469 (62.0%) provided us detailed information of financial revenue and DGS from 2009 to 2016. Therefore, 469 primary care facilities from 31 counties/districts were included in this study. Sasabuchi-Lind-Mehlum tests and multivariate regression models were used to examine the inverted U-shaped relationship between the DGS and service scope.ResultsOf 469 PCFs, 332 (70.8%) were township health centres. Proportion of annul DGS to FR arose from 26.5% in 2009 to 50.5% in 2016. At the low proportion of DGS to financial revenue, an increase in DGS was associated with an increased service scope of primary care facilities, whereas the proportion of DGS to financial revenue over 42.5% might cause narrowed service scope (P = 0.023, 95% CI 11.59–51.74%); for the basic medical care dimension, the cut point is 42.6%. However, association between DGS and service scope of public health by primary care facilities is statistically insignificant.ConclusionWhile the DGS successfully achieved equalization of basic preventive and public health services, the disproportionate proportion of DGS to financial revenue is associated with narrowed service scope, which might cause underutilization of primary care and distorted incentive structure of primary care. Future improvements of DGS should focus on the incentive of broader basic medical services provision, such as clarifying service scope of primary care facilities and strategic procurement with a performance-based subsidies system to determine resource allocation.

OPŁACALNOŚĆ UPRAWY ŁUBINU SŁODKIEGO I GROCHU PASTEWNEGO NA TLE WYBRANYCH ZBÓŻ OZIMYCH

The subsidies for legumes introduced in 2010 resulted in an increase in their cultivation area, including the area of sweet lupine and fodder pea. The cultivation of lupine is usually carried out on soils of the rye complex, similarly to winter rye, while the cultivation of peas – on soils of the wheat complex, like winter wheat. Due to similar soil requirements, legumes compete with cereals for the arable land. However, the cultivation of the former is not considered to be very profitable, even after including direct subsidies for cultivation. The purpose of the paper was to determine the production and economic results from the cultivation of the abovementioned legumes and cereals and to compare the profitability of cultivation of sweet lupine in relation to winter rye and fodder pea in relation to winter wheat on selected individual farms in Poland in the years 2015-2017. Profitability of cultivation of the plants was determined primarily using the profitability index of production, which is a percentage relation of the total value of production (excluding direct subsidies) to the total costs. The measure of profitability was also the income from activity without subsidies and income from activity after including subsidies. In the research, we used data from the AGROKOSZTY system, the Polish FADN system and the Central Statistical Office. Vertical and horizontal analysis of the results was used. It was shown that on average in the years 2015-2017, on farms participating in the study of considered plants, the profitability of lupine cultivation, expressed by profitability index, was lower than that of rye, and pea cultivation was slightly higher than that of wheat. In addition, the first income category, which is the gross margin (difference in total production value and direct costs), and one of the last – income from activity without subsidies (difference in total production value and total costs) proved to be in the case of lupine and peas cultivation relatively low compared to cereals competing with them for the same arable land. However, after taking into account the subsidies, cultivation of legumes was more profitable than cultivation of cereals. Therefore, the incentive for cultivation of legumes certainly provides a possibility for receiving subsidies for the area of their cultivation, and also a possibility for receiving subsidies for greening.

Foreign experience in the development of dairy cattle and directions of its use in domestic practice

The article analyzes the support for the US market, where the government has allocated almost $ 22.2 billion for the development of dairy cattle. direct and indirect subsidies to the country's dairy sector (35.02 c/l), which is equivalent to 73% of farmers' milk sales, showed relatively high domestic support, export subsidies, conservation programs, risk management programs, disaster relief programs, loan programs, crop insurance, livestock support. Surveys to support the Indian market, which ranks second in the world in raw milk production (9.5%), have shown that almost 80% of small-scale farmers are small-scale farmers. Milk collection is carried out by 130 thousand dairy cooperatives. NABARD (National Bank for Agriculture and Rural Development) under DEDS, provides for subsidies of up to 25% of costs. China is investing heavily in the construction of large dairy farms and livestock complexes with up to 100,000 cows. The Australian market produces 9.3 million tonnes of milk, of which 36% is exported and is the world's fourth exporter of dairy products (6% of the world market). Australia's dairy cattle are characterized by a small amount of direct government support. During 2015-2016, agriculture received financial and commercial assistance over $ 147 million. US in the form of payments to farms. It has been established that price forecasting plays an important role in regulating the milk market in Australia, on the basis of which the profile Ministry, taking into account world prices, generates milk price indices. Analysis of milk production in Switzerland has shown that it remains highly subsidized. In 2013, state support for milk producers amounted to CHF 1.8 billion, incl. direct subsidies are estimated at 1.5 billion Swiss francs, which is 61 thousand Swiss francs per dairy farm, or 0.41 Swiss francs per 1 liter of milk. The state support system for dairy cattle in Canada has been found to include the following instruments: import tariffs that restrict dairy imports; minimum guaranteed prices for raw milk that are set at the maximum amount of milk sold to the dairies within the quota; a system of direct payments to farmers for milk production within the quota. The amount of direct payments per 1 liter of milk is set annually by the government. In order to support Canadian producers in technological modernization aimed at improving the efficiency of milk production, a dairy farm investment program (DFIP) is implemented with state support of $ 250 million. USA According to the Organization for Economic Co-operation and Development (OECD) in Iceland, Japan, Norway and Switzerland, the level of support for dairy producers exceeds on average 70% of the gross income of farmers, in Canada, the EU, Hungary, Korea and the USA the amount of support is 40-55%. An analysis of the support for the development of dairy cattle in the EU countries showed that the following instruments are allocated for these purposes: production restrictions (milk production quotas); government interventions and storage; Establishment of product sales regulations / regulations; the dairy package (including regulating contractual relations in the dairy sector); foreign trade (import regulations, export subsidies); government subsidies. It is found that the main factor that increases the profitability of dairy production in developed countries is the improvement of quality and differentiation of the range. Major factors contributing to the successful development of dairy cattle are increased government support and economical use of resources. Also used are a set of financial incentives, including reducing the tax burden. Key words: Livestock, milk market, domestic support, development programs, cooperation, financial incentives, subsidies, import tariffs, quotas.

Investigating the Practices, Problems, and Policies for Port Sea–Rail Intermodal Transport in China

Intermodalism is currently a mainstream mode of international transport because of its operational efficiency and cost-effectiveness compared with unimodal transport. In 2011, the Chinese government launched port sea–rail intermodal transport (PIT) projects to promote and facilitate its transport system. As a result, seaports are now ruling the waves of sea–rail intermodal transport in China. However, barriers have occurred in many parts of the system from transport sectors to government departments, challenging the accessibility, connectivity, and accountability of the intermodal system. This paper investigates the various parties that are involved in PIT, and aims to outline its development, including its present status, bottlenecks, and other influential elements. Through a questionnaire survey and content analysis, the main problems are identified as lack of institutional design and system regulation, resistance from the rail sector, insufficient cooperation and investment, and a fragmented information system. Policy recommendations are addressed through a three-step administrative framework: (a) unification of international regulations and standards; (b) rail sector reform for better alignment with other transport sectors; (c) incentive policies for enterprises instead of direct subsidies.

A Bilevel Optimization Model of Infrastructure-Dependent Technology Adoption: Overcoming the Chicken-and-Egg Problem

Many technologies in energy, transportation, and telecommunications require large infrastructure systems to deliver benefits to adopters and society. Policymakers seeking to promote the diffusion of infrastructure-dependent technologies are often confronted with the ``chicken-and-egg problem: consumers are reluctant to adopt the technology without adequate infrastructure available, and firms are reluctant to invest in infrastructure without a sufficient number of adopters. This chicken-and-egg problem can hinder the diffusion of new technologies and prolong the timeframe over which existing technological systems remain locked-in. In this paper, we formulate a stylized model of technology policy decision-making from the perspective of a policymaker who seeks to stimulate the market penetration of an infrastructure-dependent technology. Our model is a multi-level optimization problem in which a policymaker (first level) maximizes net social benefits by setting the levels of two incentives: a subsidy for a profit-maximizing firm (in equilibrium with two other firms, the second level) to invest in infrastructure that raises the benefit of adoption to consumers, and a direct subsidy for consumers to adopt the technology (third level). We analytically derive the firms' and consumers' optimal responses to the first-level policy decisions. Then, we analytically establish the optimal additional adoption — beyond the laissez-faire level — that the policymaker should stimulate by setting the subsidies. Finally, we present a case study on electric vehicle diffusion and obtain insights into how a policymaker should allocate resources to charging infrastructure and vehicle incentives. We also uncover a counterintuitive possibility where adoption can decrease with a technology's benefits.

Economics of energy subsidy reforms in Bangladesh

As in many countries around the world, subsidies to energy in Bangladesh impose a significant fiscal burden, with benefits that disproportionately accrue to high-income households. Using a computable general equilibrium model, this study investigates the economy-wide impacts of the removal of direct subsidies in the electricity sector and indirect subsidy in natural gas in Bangladesh. The study finds that the removal of energy subsidies would be beneficial to the economy and would increase GDP. The magnitude of the economic impact depends on how the budgetary savings from the removal of electricity subsidy and the increased revenues due to the removal of indirect subsidies to natural gas are reallocated to the economy. Recycling the savings (or the new revenues) to fund investment would benefit the country most, followed by the case of utilizing them to fund cuts in income taxes, and finally to fund cuts in indirect taxes. While the reallocation of budgetary savings to households through lump-sum transfers is found inferior to other recycling options considered, it could be the preferred from the distributional perspective. However, further analysis is needed to confirm this.

Cache Subsidies for an Optimal Memory for Bandwidth Tradeoff in the Access Network

While the cost of the access network could be considerably reduced by the use of caching, this is not currently happening because content providers (CPs), who alone have the detailed demand data required for optimal content placement, have no natural incentive to use them to minimize access network operator (ANO) expenditure. We argue that ANOs should therefore provide such an incentive in the form of direct subsidies paid to the CPs in proportion to the realized savings. We apply coalition game theory to design the required subsidy framework and propose a distributed algorithm, based on Lagrangian decomposition, allowing ANOs and CPs to collectively realize the optimal memory for bandwidth tradeoff. The considered access network is a cache hierarchy with per-CP central office caches, accessed by all ANOs, at the apex, and per-ANO dedicated bandwidth and storage resources at the lower levels, including wireless base stations, that must be shared by multiple CPs.

How Green Public Procurement can drive conversion of farmland: An empirical analysis of an organic food policy

This paper studies a Green Public Procurement (GPP) policy decided by the Swedish government in 2006, stating objectives related to organic farming. The policy aims to increase the public sector's organic food purchases, in order to incentivise Swedish farmers to convert to organic practices, thereby contributing to national environmental quality objectives. We analyse the effect of organic food procurement on organic agricultural land, using panel data from 2003 to 2016 including information on municipalities' organic food purchases, land use, and direct subsidies aimed at organic production. Based on different specifications and mainly FGLS estimations, we conclude that the 2006 organic food policy is associated with a significant positive impact on organic agricultural land. A significant effect of direct agricultural policy in the form of subsidies is also found.

Reform Disconnections between the Free Quality Kindergarten Education Scheme and Kindergartens in Hong Kong

National Association of Education for Young Children (NAEYC) (2009) stated early childhood education (ECE) practitioners are key agents who develop quality assured curriculum and conduct teaching through developmentally-appropriate practice (DAP). They play the vital role in providing quality education for enhancing children's whole-person development in early years, in the sense that, their importance and significance towards children’s development is an undeniable fact. In order to retain and maintain a stable teaching team in kindergartens, whether or not ECE practitioners’ salary could be guaranteed with statutory increment are the key concerns of different stakeholders in ECE, where appropriate, the Government of Hong Kong Special Administrative Region (HKSAR) plays a pre-dominant role in policy-making on the subsidy of ECE in Hong Kong. This paper therefore examined the key initiative on the salary adjustment for kindergarten practitioners through the implementation of the Free Quality Kindergarten Education Scheme (Scheme) starting from 2017/18 school year (Education Bureau, 2017b). The latest three policy addresses on the direct subsidy to kindergartens joining the Scheme (Scheme-KGs), announced by the Government of HKSAR in 2016, 2017 and 2018, were extracted for examining the fault-lines in terms of direct subsidies for Scheme-KGs via content analysis. Developed by Walker (2006), the Five Reform Disconnections were adopted as theoretical framework for analyzing the disconnection between the Scheme and teachers' expectation on their salary adjustment. Practical recommendations were provided for alleviating the said disconnection.

Are only demand-based policy incentives enough to deploy electromobility?

ABSTRACT European Union (EU)’s energy and policy targets necessitate the penetration of new propulsion systems in the automotive industry. In this direction, the deployment of electric vehicles (EVs) and plug-in hybrid electric vehicles that rely on low greenhouse gas emission electricity generation has great potential to significantly alleviate the dependence on fossil fuel consumption in the transport sector. In this study, the policy incentives that different countries have implemented for stimulating the market of EVs are presented. Different policy instruments are examined, in order to support the deployment of EVs in Greece. Based on data from previous study, where total costs of ownership have been calculated, three alternative policy support incentives have been developed and analysed to promote the use of EVs until 2030 in Greece. Results indicate the direct subsidy scheme is more favourable over a carbon taxation system. It is suggested that EV will be competitive with ICE in the year 2022/2023, if no additional policies are implemented in Greece. This study fills the gap in the literature by offering a policy view of the main measures as well of actions that need to be taken in Greece, in order to promote electromobility.

Hidden subsidies and the public ownership of sports facilities: a case study of Levi's Stadium in Santa Clara

Levi's Stadium in Santa Clara, California is an example of a private financing/public ownership arrangement. While the stadium's construction resulted in no direct tax increases and officially included only $114 million in direct subsidies, this ownership arrangement allows the San Francisco 49ers to avoid many types of taxes on the income generated from Levi's Stadium. We estimate the total tax savings for the 49ers to be between $106 and $213 million over the first 20 years of operations at Levi's Stadium compared with a privately financed and owned option. These amounts match or exceed the more widely publicised direct construction subsidies for the stadium. We argue that tax savings inherent in private financing/public ownership arrangements represent indirect and hidden subsidies.

Государственное стимулирование инвестиционной активности в ресурсном регионе: дальневосточный вариант

The authors studied the actual policies and emerging effects of state incentivizing of investment activity instruments under the ‘new model’ of development for the Far East of Russia. There were shown the specifics of localizing investments in the resource region in shape of preferential regimes of Territories of Advanced Social and Economic Development (TAD or ASEZ Advanced Special Economic Zones) and also extraterritorial preferences as direct subsidies from the federal budget to infrastructure projects of strategically important investment projects and regional investment projects. The effects of these instruments employed in the Far Eastern Federal District in 2014–2020 demonstrate that the package of state measures formed for attracting investments and its separate elements (royalty benefits, the criterion of maximum attraction of private investments for every rouble of budget ones, etc.) have promoted investments mainly in extraction of minerals in the total surveyed range of support instruments. The outcome of these preferences was further growth of resource-based industries in the Far East economy structure (which to a certain extent predetermines the perspective economy structure of the macro region). The analysis of the rate of accumulation (a share of investments in the regional Gross Domestic Product) as a factor of economic growth showed that the majority of Far Eastern regions (except the mono-mineral Sakhalinskaya and Magadanskaya oblasts and the Chukotsky Autonomous Okrug) do not reassert the role of resource-based industries as key drivers for their economic growth which would have justified state incentives for extraction of mineral resources in particular. Certain modifications have been revealed in the very instruments of state incentives under the ‘new model’ of development in the Far East of Russia among which is a blurring of border lines between preferential territories to legitimize incentivizing of mineral companies; a changed (reduced) role of regional authorities in implementation of different instruments; forming ‘multi-layer’ preferences in the interest of mineral companies. It was demonstrated that in the surveyed contour of key actors interacting in the process of implementing different instruments of a ‘new model’ for development of the Far East of Russia (federal and regional administration, businesses) with greater vividness comes to the fore a tendency for shaping key outcomes of preferences in mineral companies

Extreme Events, Entrepreneurial Start-Ups, and Innovation: Theoretical Conjectures

In light of the COVID-19 pandemic, we scrutinize what has been established in the literature on whether entrepreneurship can cause and resolve extreme events, the immediate and long-run impacts of extreme events on entrepreneurship, and whether extreme events can positively impact (some) entrepreneurship and innovation. Based on this, we propose a partial equilibrium model to provide several conjectures on the impact of COVID-19 on entrepreneurship and derive policy recommendations for recovery. Our model's comparative statics shows that entrepreneurship recovery will benefit from aggregate demand-side support measures, combined with direct subsidies for start-ups, firms' revenue losses, and loan liabilities, as well as from actions that promote income redistribution.

Investor Tax Credits and Entrepreneurship: Evidence from U.S. States

Angel investor tax credits are used globally to spur high-growth entrepreneurship. Exploiting the staggered implementation of these tax credits in 31 U.S. states, we find that while they increase angel investment, they have no significant effect on entrepreneurial activity. Tax credits induce entry by inexperienced, local investors and are often used by insiders. A survey of 1,411 angel investors suggests that a “home run” investing approach alongside coordination and information frictions explain low take-up among experienced investors. The results contrast with evidence that direct subsidies to firms have large positive effects, raising concerns about using investor subsidies to promote entrepreneurship.

The NBN Futures Forum

On 22 October 2019, TelSoc held its second NBN Futures Forum in Melbourne on the theme of realising the user potential of Australia’s National Broadband Network. Four speakers discussed various aspects of usage, including digital inclusion, access and affordability, broadband-enabled services, and service pricing. While the NBN has increased access to broadband, affordability remains an issue and the evidence suggests that gaps in digital inclusion are not being closed. The New Zealand experience suggests that demand for high-speed broadband will continue to grow if wholesale and retail prices are appropriately set. The cost of the NBN rollout remains a challenge for wholesale prices. Various improvements in affordability, including direct subsidies for low-income households, were canvassed.

Game-Theoretic Analysis to Examine How Government Subsidy Policies Affect a Closed-Loop Supply Chain Decision

The pros and cons of government subsidy policies in a closed-loop supply chain (CLSC) setting on optimal pricing, investment decisions in improving product quality, and used product collection under social welfare (SW) optimization goal have not been examined comprehensively. This study compares the outcomes of three government policies under manufacturer-Stackelberg (MS) and retailer-Stackelberg (RS), namely (i) direct subsidy to the consumer, (ii) subsidy to the manufacturer to stimulate used product collection, and (iii) subsidy to the manufacturer to improve product quality. Results demonstrate that the greening level, used product collection, and SW are always higher under the RS game, but the rate of a subsidy granted by the government is always higher under the MS game. Profits for the CLSC members and SW are always higher if the government provides a subsidy directly to the consumer, but productivity of investment in the perspective of the manufacturer or government are less. In a second policy, the government organizations grant a subsidy to the manufacturer to stimulate used product collection, but it does not necessarily yield the desired outcome compared to others. In a third policy, the manufacturer receives a subsidy on a research and development (R&D) investment, but it yields a sub-optimal greening level. This study reveals that the outcomes of subsidy policies can bring benefit to consumers and add a degree of complication for CLSC members; government organizations need to inspect carefully among attributes, mainly product type, power of CLSC members, and investment efficiency for the manufacturer, before implementing any subsidy policies so that it can lead to an environmentally and economically viable outcome.

SUBSYDIOWANIE ROLNICTWA UKRAINY: GŁÓWNE KIERUNKI, PROBLEMY I PERSPEKTYWY

The article analyses the main forms of state support for agricultural producers of Ukraine for the period from 1991 to 2017 for the main types of agricultural products. Two areas of support for producers of livestock and crop products are considered: supporting the market price of products and subsidies from the state budget. The main problems of state support for the development of agriculture are highlighted, among which there is an imbalance in the support of commodity producers through direct subsidies and through the support of market prices by indirect regulatory methods. The paper considers the main directions of subsidies to the EU countries and develops proposals to improve the agricultural policy of Ukraine.