Allocation Of Subsidies Research Articles

The Financial Model for Water and Sanitation Services in Portugal: Lessons from Decades of Subsidies and Questionable Public Policies

Despite the billions of euros used as subsidies over recent decades, Portugal’s water sector continues to struggle, being characterized by significant inefficiencies and differences between high- and low-performing water and sanitation services (WSSs). Current subsidy policies lack transparency and are not linked to performance results, undermining efforts to promote efficiency and sustainability in both environmental and financial dimensions. To address these issues, this article highlights relevant aspects to be taken into account in the redefinition of funding allocation in the Portuguese WSS sector. By implementing performance-based criteria for subsidy allocation and prioritization, regardless of the identity of beneficiaries or providers, we aim to instigate accountability and efficiency in this process. The analysis draws on empirical data to highlight the shortcomings of existing practices and demonstrates the potential benefits of adopting the “user-pays” principle. This principle is able to improve the definition of tariffs aiming for full cost recovery, while still providing for disadvantaged and vulnerable customers through social tariffs or assistance programs. Key findings indicate that coordinated efforts among government agencies, regulators, public and private utilities, and municipalities are essential to develop and promote effective financing strategies. This stakeholder’s cooperation is essential for managing the urban water cycle sustainably and addressing the sector’s long-term challenges. This research implies that a strategic shift in subsidy allocation is required, to develop accountability, efficiency, and equity in the WSS sector. The allocation of financial resources must be better justified to enhance overall performance in the sector.

A Stackelberg game framework for promoting battery-powered construction machinery through government subsidies

Diesel-powered construction machinery is a major source of harmful pollutants and carbon emissions. Technological advancements have made battery-powered construction machines (BPCMs) increasingly viable in operations. However, the high purchase prices of BPCMs represent a huge obstacle for contractors to embrace these low-emission alternatives. To facilitate the sustainable development of the construction industry, it is imperative for the government to implement effective subsidy allocation policies to promote the electrification of construction machinery. This paper proposes a Stackelberg game framework for optimal subsidy allocation. In the proposed framework, the government decides the subsidy amount offered to each type of BPCMs to minimize both pollutant emissions and carbon emissions. The contractors can then observe the government’s decision and make their optimal decisions regarding the purchase, operation, and replacement of construction machines accordingly to minimize their total costs. Contractors’ decisions in turn influence the government’s decision. Such an intricate framework has many appealing properties, which are analyzed in depth to provide useful managerial insights. Additionally, the design of effective subsidy policies by the government depends on a precise prediction of the contractors’ demand for construction machinery. To this end, a random forest machine learning model is developed. Real data were collected for model construction and testing. Statistical results and industrial comments show the high quality of our predictions.

Распределение федеральных выравнивающих дотаций: оценка последствий основных изменений

The purpose of the work is to establish how the main changes in the methodology of distribution of grants from the federal budget for fiscal capacity equalization affected the budget revenues of the constituent entities of the Russian Federation. The relevance of the study is due to the fact that the way of distribution of non-earmarked interbudget transfers affects the effectiveness of the model of interbudget relations. The modeling of the values of the transfers allocated annually to each constituent entity of the Russian Federation has been performed, demonstrating the adequacy of the developed methodology. The consequences of all major changes in the methodology of allocation of subsidies, such as introduction of restrictions on the reduction and increase of transfers, launching the mechanism of the model budget, reducing the equalization criterion and adding the coefficient of the level of social burden to the index of budget expenditures, have been calculated. It was found that the changes in the distribution methodology were progressive, that is, the higher was the fiscal capacity before the distribution, the smaller was the annual increase in equalization grants as a result of the changes. In other words, over time, more and more funds were allocated to the least prosperous regions. The regions of the North Caucasus Federal District benefited the most from the changes, and in general, all the innovations, except for restrictions on the reduction and increase in subsidies, had approximately the same spatial effect in terms of the composition of the “winning” regions. At the same time, it is more difficult to draw conclusions about the “losing” regions, since they have different levels of fiscal capacity.

Process Integration Technique for Targeting Carbon Credit Price Subsidy

Mitigating climate change requires a portfolio of strategies and the use of carbon dioxide removal techniques or negative emissions technologies (NETs) will be necessary to achieve to achieve this goal. However, the high implementation costs of advanced NETs lead to expensive carbon credits, hindering their broad acceptance and use. One potential solution involves governmental support through subsidies, aiming to boost the availability of NET-derived carbon credits. This research uses a graphical technique based on an extension of pinch analysis to identify the ideal subsidy level for carbon dioxide removal, taking into account factors such as carbon pricing, supply, and demand. The proposed approach modifies the limiting composite curve (LCC) methodology to accurately determine the optimal subsidy and establish the baseline amount of subsidized carbon dioxide removal needed. The approach enables the convenient and efficient construction of the LCC using a composite table algorithm. To illustrate the proposed methodology, two case studies composed of different NETs and demand sectors are investigated. The results show the most advantageous subsidy levels for these technologies, providing valuable insights to guide policymakers and investors in their decarbonization efforts. This research contributes to the development of effective governance and investment strategies by optimizing NET subsidy allocation. Such optimization is crucial for facilitating the widespread implementation of these technologies, which are in-line with the global efforts to mitigate climate change.

Vaccination subsidy allocation under budget constraints considering the human interpersonal contact pattern and vaccine protection effect in epidemics

Vaccination subsidy is one of the most important measures to increase the willingness of people to be vaccinated for epidemic prevention and control. Given the budget constraint of vaccination subsidy and the different roles of various age groups population in the epidemic transmission process, a novel approach is proposed to optimize the utilization of the limited vaccination subsidy budget. First, an age-structured SIR model that integrates the human interpersonal contact pattern and vaccine protection effect is developed to simulate the epidemic trend under a certain vaccination state. Then, a decision model is constructed to determine the optimal vaccination subsidy allocation scheme for various age groups based on the age-structured SIR model. A case study of Wuhan City is used to verify the decision approach, and a series of sensitivity analyses are conducted. The result shows that the peak time of an epidemic is positively related to the total treatment cost for all the infections, and more subsidies should be allocated to the populations with higher interpersonal contact frequencies for epidemic prevention and control.

Industrial policy persistence and local economic performance: The role of subsidy allocation in China

The persistence of economic policies is crucial for their effectiveness and economic outcomes. However, debates on industrial policy effectiveness have primarily focused on policy tools and target sectors, with little attention given to policy persistence. This paper addresses this gap by evaluating how policy persistence during subsidy implementation affects policy effectiveness. We measure policy persistence using cosine similarity between vectors reflecting the cross-industry distribution of subsidies over consecutive years and instrument it with the occurrence of abrupt public safety incidents. Our results reveal a significantly positive effect of subsidy allocation persistence on local economic performance. This effect is stronger when local governments are influential or industries need consistent government support and weaker when policy changes are more predictable or local officials are less prone to decision-making mistakes. We further provide micro-level evidence showing that the persistence of industrial policies impacts local economic performance by influencing the activities of local businesses.

A Study on the Effect of Special Subsidy Allocation Performance on the Re-election Vote Share of Members of National Assembly: Focusing on Retrospective Voting Theory

A Study on the Effect of Special Subsidy Allocation Performance on the Re-election Vote Share of Members of National Assembly: Focusing on Retrospective Voting Theory

Regional dimension of the efficiency-support nexus in agriculture: Testing the land value approach in Russia

State support for agriculture is a crucial tool for adjusting the competitive advantages of agricultural producers to a volatile market environment. In countries with diverse natural conditions for agriculture, however, the allocation of subsidies often focuses on bridging spatial development gaps rather than maximizing the return on inputs. To improve the efficiency of resource use in agriculture, it is essential to tailor subsidy criteria to regional disparities in agricultural potential. Using the example of Russia’s 81 administrative regions, the authors have tested a five-stage methodology for determining the support-generated parameters of output, efficiency, impact, revenue, and profitability. This methodology takes into account both natural and economic factors that contribute to the competitive advantages of each region. The study aims to identify the parts of the performance indicators, such as gross agricultural output and revenue, that are influenced by the amount of subsidies in five different types of territories, which are categorized by the cadastral value of their farmland. It has been found that the allocation of subsidies is not entirely based on the return on the funds allocated. There is a discrepancy between the competitive advantages of these territories in agricultural production and the amount of funds they receive through government support programs. The efficiency of government support differs significantly depending on the type of agricultural product produced in each territory. The approach developed by the authors provides a tool that policy makers can use when tuning the allocation of subsidies based on the differences in the agricultural potential of each territory.

Wage subsidy in the DRC: A CGE analysis

This paper analyzes the impact of wage subsidies on lower-skilled formal workers in the Democratic Republic of Congo (DRC). It employs a multi-sectoral, empirically-calibrated general equilibrium model to capture the economy-wide transactions between the formal and informal sectors and assess policy simulations in the DRC. The simulations, both in the short and long run, indicate that when the government provides wage subsidies to lower-skilled workers, it significantly improves the real disposable incomes of both formal and informal households. There is a general increase across formal and informal sectors in real household disposable incomes due to the wage subsidy. The results show that subsidy allocation narrows the income gap between high and low-income households, as well as between formal and informal sectors. The findings are insightful for wage policy simulations, as the wage subsidy targeting lower-skilled formal workers increases real GDP from the expenditure side by 1.19% and 3.19% in the short and long run, respectively, from the baseline economy.

A tripartite evolutionary game study on the governance of online catering riders’ traffic violations from the perspective of collaborative regulation

ABSTRACT In the online catering industry, delivery riders’ traffic violations significantly threaten public transportation safety, inadequately addressed by current regulations from the government and online platforms. This paper proposes a government-led collaborative regulatory mechanism with active platform participation. A tripartite evolutionary game model, including the government, platforms, and riders, evaluates this approach. Findings suggest that collaborative regulation forms when the combined start-up and subsidy costs of government-led regulation are less than the total benefits of collaboration and when the cost difference between active and passive platform participation is less than the total benefit of active participation. Effective regulation occurs when combined penalties for riders’ violations exceed the profit difference between illegal and compliant deliveries. Reducing government regulation start-up costs and increasing penalties and enforcement probabilities can promote compliance among riders. Excessive subsidies to platforms do not effectively control violations, indicating the need for balanced subsidy allocation for optimal regulatory effectiveness.

Evaluation of subjective policy reflection using the Choquet integral and its applications

This paper proposes a methodology for assessing the subjective policy reflection in national trade policies through the use of Choquet integral. Specifically, we introduce three fuzzy measures that reflect different policies based on the trade items included in data on the annual trade amounts of selected national animal products from 2010 to 2020. The Choquet expected utility serves as a tool for evaluating subjective policy reflection, allowing for the comparison of national economic policies across selected countries. To demonstrate the practical application of the proposed methodology, we provide specific numerical values that represent the evaluation of subjective policy reflection. Furthermore, we present a decision-making strategy that pertains to the allocation of subsidies on imports and exports of trade transaction amounts, assuming that government subsidies are budgeted using the Choquet expected utility. The proposed methodology offers a valuable framework for policymakers and stakeholders, facilitating in-depth analysis and improvement of the effectiveness of national trade policies.

Shallow Subsidies for Veterans Facing Housing Barriers in the VA Supportive Services for Veteran Families Program

Abstract: The Department of Veterans Affairs provides a shallow subsidy (i.e., subsidizing 50% of an individual's rent for two years) to Veterans experiencing housing instability. We sought to describe the characteristics of Veterans who received these subsidies. Methods. We conducted a retrospective cohort study of Veterans between 10/2019–9/2021. We identified Veteran-level characteristics associated with receiving a shallow subsidy using a multivariable two-part regression model. We also conducted qualitative interviews to identify how shallow subsidies are allocated. Results Black race, higher income, more education, and older age were positively associated with receiving a shallow subsidy; previous homelessness, prior VA outpatient cost, and participating in permanent supportive housing were negatively associated with receiving a shallow subsidy. Interviews revealed that income was the most influential determinant of whether to give shallow subsidies. Discussion Our mixed methods findings were consistent, indicating that socioeconomic stability is an important driver of shallow subsidy allocation decisions.

Strategic criteria for classifying the regions of Russia as subsidized

The article establishes strategic criteria for classifying regions (subjects) of the Russian Federation as subsidized. Improvement of the systems of allocation of budgetary funds and redistribution of financial resources ensures sustainable economic growth and improvement of the quality of life of the population. To identify the strategic criteria for classifying regions as subsidized the authors have analyzed the existing methodology of allocation of subsidies for equalizing budget security of the RF subjects. The list and the number of the regions classified as subsidized regions and donor regions did not significantly change in 2016–2022. Comparison of regions by such indicators as GRP and budget security before and after the allocation of subsidies proves that the existing system of support of subsidized regions is unable to ensure their economic growth and development. Strategic criteria for classifying regions as subsidized are established according to the theory of strategy and the methodology of strategizing by Academician Vladimir Kvint. When identifying strategic priorities of regional development it is essential to take into consideration the competitive advantages of each region. As well as the budgetary criteria, the authors define the strategic factors which have the greatest impact on the unchanged state of the group of subsidized regions: taxation potential, the development of the infrastructure, economic development, geographic development and social development. According to the proposed strategic criteria, financial resources will be granted for maintenance of the current state as well as for implementation of regional strategies, firstly, in the context of improving the quality of life of the population. Reasonable and effectively governed system of allocation of financial aid together with the system of establishing strategic criteria for classifying regions as subsidized are crucial for eliminating regional differences and promoting overall long-term socio-economic development of Russia.

Talking and walking: Corporate digital transformation and government subsidies

The importance of corporate digital transformation is increasingly conspicuous. Nevertheless, many companies are still in the dilemma of wanting to transform but not daring to transform. This study introduces the talking and walking paradigms of digital transformation and examines the impacts of corporate digital transformation talking and walking on government subsidies based on the signaling theory. Based on panel data from listed manufacturing companies in China from 2008 to 2022, our empirical findings using the fixed effects model posit that digital transformation talking and walking enable companies to receive more government subsidies. Furthermore, corporate digital transformation talking can strengthen the positive impact of corporate digital transformation walking on government subsidies. The above results hold after considering endogeneity and employing robustness analysis. This study expands the research perspective on digital transformation and provides new insights into the behavioral logic behind the allocation of government subsidies.

Allocating the fixed cost as a complementary input in two-stage system: A DEA approach

The existing research on fixed cost allocation (FCA) in two-stage system data envelopment analysis (DEA) models typically regards the fixed cost as an additional input for each decision-making unit (DMU). However, these models overlook the prevalent real-world scenario where fixed costs act as complementary inputs in actual production processes. This study proposes a general two-stage network DEA model that incorporates the fixed cost as a complementary input to optimize the allocation scheme. First, we construct a functional relationship between the efficiency scores of DMUs and their allocated fixed costsusing a modified super-efficiency DEA model, which effectively classifies DMUs and solves infeasible solutions within the variable returns to scale (VRS) framework. Then, we propose a fair and unique allocation model based on fairness and efficiency maximization principles. Specifically, we allocate fixed costs based on the operational scale for inelastic DMUs while equitably increasing the efficiency scores for elastic DMUs. Finally, a numerical example and an empirical study on subsidy allocation among 30 provinces demonstrate the rationality and acceptability of our approach.

Improving new energy subsidy efficiency considering learning effect: A case study on wind power

Subsidy policies are instrumental in driving the development of new energy. However, the effective allocation of new energy subsidies over time is challenging given fiscal constraints. This study addresses this challenge by considering the learning effect associated with the new energy industry. A two-stage dynamic programming model is proposed to capture the investment decision-making process of companies under new energy subsidy policies and government subsidy setups. Theoretical findings suggest that company investment decisions in new energy are influenced by a guiding principle: The subsidy rate should be negatively correlated with the variation rate of production scale increment (VRPSI). We calibrate this investment decision principle using wind power data from 14 countries. According to this principle, excessive subsidy rates may result in a low VRPSI, thereby diminishing future investment profitability in the new energy industry and leading to subsidy inefficiency. Upon investigating the efficiency of annual subsidy allocation, we find that the subsidy rates were potentially set too high in 2014, 2016, and 2017. Furthermore, the government should exercise caution regarding an inefficient subsidy pattern whereby companies invest in new energy only when the subsidy rate exceeds a certain threshold, neglecting traditional power sources. It is crucial to note that although this study uses wind power industry data for calibration and simulation, the theoretical model can be broadly applied to other new energy industries and emerging industries with increasing marginal net profit.

Pelatihan Redesain Instalasi Listrik Untuk Program Konversi Kompor Gas LPG Ke Kompor Listrik Di Desa Nyurlembang

The allocation of LPG gas subsidies has increased, putting a burden on state finances, while surplus electricity production is not being utilized optimally. Electrical energy can replace LPG gas by replacing the gas stove with an electric stove. This conversion requires adequate installation to ensure the safe and secure operation of the electric stove. The implementation of the conversion program must be supported by community readiness regarding standard electrical installations for electric stoves in the form of training. Training activities were carried out in Nyurlembang Village, Narmada, West Lombok, as a community service activity. This activity aims to educate and train the public about repairing and redesigning electrical installations for electric stoves. Training methods include lecture, discussion and practice methods. Before and after the activity, participants are given a written test to determine the success of the training activity. The test results show an average score before and after training of 38.33 and 66.00 for the range 0-100. These results show that the training was quite effective with an increase in participants' theoretical and practical knowledge of 27.67.

Social welfare and equality equilibrium based carbon tax subsidy incentive approach for biomass-coal co-firing towards carbon emissions

The lack of effective and scientifically supported policy measures has led to poor application of biomass-coal co-firing. A bi-level multi-objective model is developed to formulate a reasonable carbon tax subsidy policy and optimal biomass-coal co-firing plan, which considers the interactive relationship between authority and coal-fired power plants, and achieves a trade-off between social benefits, subsidy fairness, and environmental protection. A case study and scenarios demonstrate the feasibility and effectiveness of the proposed model. The ϵ-constraint method and Karush–Kuhn–Tucker conditions are employed to optimize the global equilibrium. The results indicate that model can achieve Stackelberg equilibrium between the hierarchical decision-makers with conflicting objectives, and the subsidy allocation is highly equitable. Sensitivity analyses show that the carbon tax subsidy policy can enhance biomass fuels utilization and encourage active participation of coal-fired power plants in achieving cleaner production. These findings provide a reference role for the authority to develop scientific subsidy mechanisms and coal-fired power plants to rationalize the planning of biomass-coal co-firing for power generation.

SPA INDUSTRY RESILIENCE IN CHANGING EXTERNAL CONDITIONS: NEXUS BETWEEN TOURIST ATTRACTIVENESS AND FISCAL POLICY

Purpose – This study aims to evaluate the performance of the Czech spa industry within a dynamically changing external environment, specifically in the context of the COVID-19 pandemic. Considering the relationship between tourist attractiveness and fiscal policy effectiveness, the research explores the divergences existing among spa companies functioning across discrete spa resort categories within the Czech Republic. Methodology/Design/Approach – The research employs secondary data obtained from the State Statistical Office and the Business Register. The analysis entails an examination of the relationship between the level of tourist attractiveness and alterations in sales. Findings – The study reveals that spa resorts with higher levels of tourist attractiveness encountered a more pronounced decline in sales. Despite the notable allocation of public funds, the impact of subsidies on economic outcomes remained limited. Originality of the research – A contribution lies in its revelation of the adverse implications of over-reliance on tourism for the spa industry. The study highlights the imperative for diversification in resort portfolios. Moreover, the research offers valuable insights into the optimal allocation of subsidies, suggesting directions for more effective utilization and distribution in a manner that supports the industry's long-term sustainability and resilience.

Analyzing EU’s Agricultural Sector and Public Spending under Climate Change

Climate change not only affects weather conditions, patterns, and the frequency and severity of extreme weather events but also changes the structure of government spending. Agriculture is an important sector of the European Union (EU). However, by 2050, the industry will most likely decrease by 16%. One-third of the EU’s budget has been spent on agricultural funding, adaptation, and climate action. The effect of climate change on agriculture is mixed and dependent on the location of the region. The southern EU is adversely affected, while the northern EU is positively affected by the changes in weather patterns. The main goal of this paper is to gain insight regarding the effect climate change has on public spending in relation to the agricultural sector of the EU, using the pooled Ordinary Least Squares (OLS) and Generalized Method of Moments (GMM) methodology. The study concludes that public spending is influenced by government expenditure and government support in agricultural research and development in the EU region. In the southern EU region, the variables impacting public spending are greenhouse gases from the agricultural sector, temperature, and GDP, while in the northern region, no variable has a significant impact on public spending proxied by agricultural subsidies. The policy recommendations include a better allocation of agricultural subsidies, reconsideration of the efficiency of Common Agricultural Policy (CAP), and a focus on expanding investment in research and development in the agricultural sector.