Supply-side Subsidies Research Articles

The impact of green public procurement on corporate green innovation: evidence from machine learning and text analysis

Based on a database of over 650,000 green public procurement (GPP) contracts, we apply machine learning and text analysis methods to identify GPP. Our study examines the impact of GPP on green innovation using Chinese companies listed on the A-share market. The study has the following findings. (1) GPP significantly promotes green innovation by alleviating financing constraints and incentivizing green practices. (2) Enterprises in the maturity or growth stage, non-heavily polluting firms, and companies in regions with stringent environmental regulations are more likely to benefit from GPP. Additionally, GPP initiatives from local governments, centralized procurement, and university-based programs provide stronger incentives for green innovation. (3) Demand-side GPP and supply-side subsidies for green innovation have coordination effects. Corporate green innovation is positively influenced by the “Demand-side procurement First, Supply-side subsidies Later (DFSL)” and the “Demand-side procurement and Supply-side subsidies Simultaneously (DSS)” policies.

Decision-making model of elderly service companies under government subsidies

This study considers two government subsidy policies, namely, supply-side (subsidising elderly service companies) and demand-side (subsidising elderly customers) subsidies. A Nash game model consisting of elderly customers and two elderly service providers with different levels of infrastructure is developed to present the effects of government subsidies on the price, quality and quantity of demand for elderly services under different subsidy policies. The results show that the economic situation of the region and the strategic objectives of the local government are important factors influencing the effectiveness of the government’s subsidy strategy. For areas with good regional economic conditions, subsidies should be biased in favour of elderly care institutions with poorer infrastructure; for areas with poorer economic conditions, subsidies should be biased in favour of institutions with better infrastructure. Moreover, if the government plans to reduce prices more effectively, then it should adopt a demand-side subsidy policy for areas with a small or large elderly population and a supply-side subsidy policy for areas with a medium elderly population.

A coordinated approach for a three-echelon solar-wind energy supply with government intervention

In the contemporary era, renewable energy sources are employed globally. Their uncertain and intermittent nature conduce to a hybrid system that fully meets the electricity demand. This paper proposes a three-echelon hybrid (solar-wind) supply chain with government intervention and considers two approaches: (1) The decentralized model (non-cooperative Nash game) and (2) The government model with demand-side and supply-side subsidy policies. The optimal values obtained from the Nash game are put in the government function to acquire tariffs, and the paper aims to select the best policy. Finally, sensitivity analysis and managerial insights are presented.

Post-Keynesian economics and social policy: equality of opportunity or equality of place?

This article shows that post-Keynesian economics is more closely tied to the proposal of equality of place rather than that of equality of opportunity. More precisely, it advocates for the approach of utilizing equality of place as a means to attain equality of opportunity. These are two conceptions of social policy. Equality of opportunity distinguishes between poor and non-poor, and state intervention is focused on poor people. This mode of intervention promotes individuals’ improvements in human capital, assuming that the poor can reach the position they want through a competitive process. In contrast, the idea of equality of place is intertwined with the concept of decommodification and supply-side subsidies. It envisions a scenario in which markets might not ensure that people can access fundamental rights. Consequently, it suggests an alternate role for state intervention. Because some heterodox and post-Keynesian authors have identified with the principle of equality of opportunity, it is important to clarify the nature of the relationship between social policy and post-Keynesian economics. The principle of equality of place can provide a framework of social policy that is consistent with the tenets of the post-Keynesian tradition.

Urban food insecurity and the impact of China's affordable food shop (AFS) program: A case study of Nanjing City

Food subsidies are widely implemented as part of government policies globally to mitigate food insecurity amongst the urban poor. Subsidies to retail outlets are one a type of supply-side subsidy designed to make food more affordable to low-income consumers. China's Affordable Food Shop (AFS) program introduced by the central government in 2011 and implemented by municipal governments is one example. To date, there has been little research examining the effectiveness of the AFS program despite more than a decade of implementation. This paper presents a case study of the program's effectiveness in Nanjing which was one of the first Chinese cities to introduce the program which grew very rapidly in the years that followed. In early 2020, the Nanjing program was closed which raises important questions about its effectiveness and impact. We show that food insecurity in Nanjing is generally low but that increased food insecurity is associated with lived poverty, lower income, and unaffordability of staple foods. Food insecurity is not mitigated by proximity to an AFS Program shop. The paper argues that the program had various deficiencies and a limited effect in reducing food insecurity and increasing food accessibility. These included inappropriate targeting, program redundancy, and competition from supermarkets and public markets. In the circumstances, the decision by the city government to close the program is understandable.

Comparing supply-side and demand-side policies in the solar cell supply chain under competitive circumstances: a case study.

Due to the destructive effects of fossil fuels on the environment, using renewable energies has nowadays been suggested. In addition, because of the increased use of solar energy and the prevention the solar cell supply chain (SCSC), this chain is mainly supported by government funding. In this study, we mathematically model both supply-side and demand-side policies for a two-echelon SCSC, considering the competition between domestic and foreign suppliers as well as government intervention under the supply-side subsidy policies to support SCSC members and finance the customers through demand-side subsidy policies. The aim of this paper is to investigate the effects of government intervention under the supply-side and demand-side policies on supporting the members of SCSC and encouraging customers to increase the use of solar panels. In addition, this study explores the best policy for improving and promoting SCSC. In the real world, both supply-side and demand-side policies will help industrial factories, power plants, and households to enhance the use of solar energy for producing electricity. This study has been investigated using one real example, whose results show that the efficiency under the supply-side policy is about 7% more than the efficiency under the demand-side policy. The price under the supply-side policy is roughly 10% less than the price under the demand-side policy. The members' profit under the supply-side policy is approximately 5% bigger than the one under the demand-side policy. According to real examples, the government's utility under the demand-side policy is nearly 1% smaller than the government's utility under the supply-side policy. Finally, key findings are considered for the proposed model.

The role of governmental policy in game between traditional fuel and new energy vehicles

New energy vehicle (NEV) effectively contributes to the sustainable direction of the automobile industry, and it has been raised to the national strategic level. Our study establishes a quantitative model on the competition between firms producing traditional fuel vehicle (TFV) and those manufacturing NEVs, based on the game theory, in which both sides can adopt a cooperative or a non-cooperative strategy. Validated by an empirical analysis and other examples, the results demonstrate that, in a stock market, though the competition of market share between TFV and NEV firms is a zero-sum game, there still exists the possibility wherein firms can cooperate to achieve a win–win situation in terms of the profit. Importantly, by modeling the decision-making processes under governmental policies, we analyze the impacts of different regulation intensities on the promotion effect of NEVs. Grounded with data collected from the automobile manufacturing industry, our model illustrates that although the government’s subsidy has certain promoting effect on NEV marketing, it does not improve the profitability of the firms no matter from supply-side subsidy or consumer-side subsidy. With the gradual withdrawal of financial subsidies, dual credit policy will significantly contribute toward balancing the competition between TFVs and NEVs. Thus, this analysis is expected to provide a theoretical foundation that administrators can refer to when employing effective policy instruments to balance the competition between TFVs and NEVs, thereby steering the NEV industry toward a sustainable direction.

Lessons from last mile electrification in Colombia: Examining the policy framework and outcomes for sustainability

More than a decade ago, Colombia reached a 95% electrification rate. Despite efforts from multiple actors, including government, private sector companies, communities and donors, this rate has only barely improved. In 2020, around 1.9 million Colombians – all residing in rural areas – lacked access to electricity. The electrification challenge is compounded by the geographical isolation of these last mile communities, which makes interconnection to the national electricity grid infeasible. Even where off-grid communities do have access to electricity, supply is often limited to less than six hours per day raising questions about the adequacy of provision. This paper investigates last mile electrification in Colombia, specifically examining the policy framework and the outcomes for the sustainability of last mile projects. Drawing on document analysis, expert interviews and case studies, this paper finds that the government has created an overly complex policy environment which hinders rather than facilitates electrification efforts. It also continues prioritizing the use of diesel generators through costly supply-side subsidies, resulting in high operating costs and inadequate service. More recently, although renewable sources have shown good outcomes, for instance in the case studies examined here, these experiences have not been extensible disseminated. Finally, this paper argues that changes are required to the institutional framework to deliver electricity to last mile communities in Colombia. Specifically, if the multidimensional benefits of electricity are to be realized, changes will need to include improvements in public infrastructure to promoting intersectoral work that promotes socio-economic development of last mile communities and beyond.

The effects of accessible taxi service and taxi fare subsidy scheme on the elderly's willingness-to-travel

Taxis provide a personalized, door-to-door, and demand-responsive service, and are an attractive transport mode for accommodating the needs of an aging population. Accessible taxis further enhance the level of comfort and accessibility by providing a larger compartment and a mechanical ramp to facilitate the boarding and alighting of wheelchairs. At present, however, both ordinary and accessible taxis are infrequently used by elderly passengers in Hong Kong, due in part to high fares and long walking and wait times. Because of these limitations, taxis cannot effectively cater for the travel demands of the elderly and hence cannot improve their mobility. In this study, 580 residents of Hong Kong aged 60 or above were interviewed regarding their decision to whether to make a trip by an ordinary/accessible taxi to attend a non-compulsory social activity in hypothetical scenarios. A total of 2320 observations were obtained and a series of binary logistic regression models were calibrated to identify the significant factors influencing the elderly's willingness-to-travel. The model results show that the older elderly and those with a lower monthly expenditure were more reluctant to travel by taxi and preferred staying home. The elderly using crutches or a wheelchair had a stronger preference for accessible taxis rather than the non-walking aid users. The findings also indicate that the elderly were more sensitive to a taxi fare subsidy based on a percentage discount than one based on a fixed discount. Policy measures related to providing an accessible taxi service and taxi fare subsidy scheme to improve the mobility of the elderly are discussed: A step-wise taxi fare subsidy scheme is recommended to integrate with current transport policy measures to look after the needs of the elderly at different ages, and a supply-side subsidy is also recommended to support local taxi operators to purchase accessible taxis and increase the fleet size to minimize the wait time of users.

Una economía política y cultural de las subvenciones estatales a la educación privada en Argentina

En comparación con otras modalidades de alianza público-privada (public-private partnerships o PPP) en educación de surgimiento más reciente como los programas de vouchers o escuelas charter inspirados en los postulados de la teoría de la elección pública, las políticas de subvención estatal a la oferta suelen responder a teorías del cambio menos explícitas. La mayoría de estas políticas son abordadas por la literatura como arreglos singulares y altamente idiosincrásicos, en lugar de ejemplos de una variedad particular de PPP. A partir de una revisión de la literatura y del análisis de los debates legislativos del período 1947-2006, este artículo procura examinar el proceso de adopción del marco político-regulatorio definido por la política de subvenciones a escuelas privadas en Argentina desde una perspectiva evolutiva de economía política y cultural. Se distinguen tres períodos a efectos analíticos entre los cuales prima una lógica evolutiva de continuidad no lineal sujeta a los vaivenes contextuales e impulsados por distintos actores en el campo de las ideas y la práctica política.

The impact of external R&D financing on innovation process from a supply-demand perspective

This paper sheds light on the effects of two different types of R&D financing sources respectively from a supply-demand combined perspective, namely subsidy from government and venture capital in market, on the innovation process. Our empirical analysis is based on a unique data set of industrial enterprises located in Beijing ZhongGuanCun Science Park during the period 2008–2015. In terms of the two stages of the innovation process, this paper untangles and compares the effects of the two financing sources on R&D input, patent output as well as profit outcome. We find that both supply- and demand-side external R&D financing channels have differential effects on the innovation process in terms of input, output or outcome as well as the different-sized enterprises. Supply-side subsidy tends to be more effective at the front end of the innovation process, while venture capital shows a demand-side consideration on technology evolution by focusing more on the back end of the innovation process. Both government subsidy and venture capital can have a significantly positive impact on the entire innovation process of small and micro enterprises, whereas for large and medium-sized enterprises, subsidy has no significant impact on profit outcome and venture capital can only affect patents positively. These findings suggest that the Chinese government should focus more on small and micro firms and increase such firms’ access to venture capital through a process of certification, so as to achieve an effective combination of government functions and market functions.

Speaking cooperation, acting competition: Supply-side subsidies and private schools in socioeconomically disadvantaged contexts in Buenos Aires

Few studies have explored how schools respond to competition in socially embedded education quasi-markets. This study focuses on how state-subsidized privately-run low-fee schools (S-LFPSs) compete with free public schools in some of the poorest neighborhoods of the City of Buenos Aires. In particular, we explore how S-LFPSs follow different logics of action to attract (and shape) enrollment profiting from their extended autonomy and some regulatory gaps. We applied discourse analysis on data from eight months of ethnographic case study research in nine S-LFPSs. Student selection and operational changes (e.g., increasing the student/teacher ratio) prevail over academic and curricular changes. Selection is operated by means of aptitude tests and screening interviews, and other symbolic artifacts aimed at signaling differences with state-run schools and the potential fit between schools and families. We present a heuristic typology of the different logics of action systematizing the schools’ responses as their leading orientations toward the competitive environment. We suggest that policy inconsistencies and deficient governmental oversight tilt the field against state-run schools. Rather than ensuring equality of educational opportunity, the policy contributes to shape and deepen a highly segregated and inequitable educational landscape.

Efficient Subsidies via Supply Re-usability

Surge pricing finds equilibrium prices in periods of excessive demand or scarce supply. Effective or not, it is a business risk when riders perceive spiking prices as exploitation of people's emergency. This paper studies subsidy policies that avoid the downside of surge pricing when accommodating the fluctuation of demand. We show that the re-usability of driver supply presents a hidden capacity. Tapping it wisely through supply-side subsidies prescribes a non-pricing alternative to the current pricing policies without the need for either hiking price or recruiting new drivers. We use a queueing model together with the Stackelberg game to analyze how to optimally subsidize a reusable pool of driver supply, both myopically and in the long run. Knowing drivers are self-interested and given a specific structure of base trip fare, our analysis shows that injecting a healthy dose of myopic subsidy into the matching process reverts unfavorable decisions of individual drivers. In aggregate, the induced supply multiplier effect significantly boosts vehicle circulation and effective demand. We also show that, on the other hand, the impact of myopic subsidies on long-run throughput is not monotonic. There is a physical limit in terms of how much the platform can tap this hidden capacity. However large the budget of incentive, its size is intrinsically constrained by the spatial structure of base trip fare and the distribution of customer travel distances.

Affordable housing brings about socio-spatial exclusion in Changchun, China: Explanation in various economic motivations of local governments

Compared to Western countries, China's provision of affordable housing mainly focuses on supply-side subsidies. In China, the provision of affordable housing highly depends on local governments' impetus. While this, on one hand, ensures the stable provision of such housing, on the other hand, the model is disadvantageous since local governments have great discretionary power in the construction of affordable housing. Driven by economic interests, local governments often construct high-capacity affordable housing communities in remote locations, thus potentially distorting the ambitious aims and principles of China's affordable housing scheme. The empirical findings of this paper confirm that this particular spatial distribution of affordable housing has negatively affected the social interactions and life chances of its users. The key reasons behind these negative effects were found to be primarily economic motivations of local governments to construct such housing, including reducing their losses in land finance, maintaining high housing prices in central areas, pushing the price of urban land, and promoting urbanization.

Supply-side subsidies to improve food access and dietary outcomes: Evidence from the New Markets Tax Credit

In an effort to improve diet and health outcomes, policymakers have increasingly turned to supply-side subsidies aimed at encouraging investment by supermarkets and other food retailers in low-income areas. This article examines whether the US federal government’s New Markets Tax Credit (NMTC) has affected the entry of retail food establishments, and in turn food shopping and purchasing patterns, in low-income communities. To identify the impacts of the programme, we take advantage of a discontinuity in NMTC funding generated by the formula used to determine the eligibility of census tracts for investment under the programme. We find that the NMTC Program has had modest, but positive impacts on supermarket entry in low-income communities. Based on household-level scanner data, there are no detectable effects on households’ food purchasing patterns in affected neighbourhoods, at least in the short run.

Supply-Side Subsidies to Improve Food Access and Dietary Outcomes: Evidence from the New Markets Tax Credit

In an effort to improve diet and health outcomes, policymakers have increasingly turned to supply-side subsidies aimed at encouraging investment by supermarkets and other food retailers in traditionally underserved areas. This paper examines whether the U.S. federal government’s New Markets Tax Credit (NMTC) has affected the entry of retail food establishments, and in turn food shopping and purchasing patterns, in low-income communities. To identify the impacts of the program, we take advantage of a discontinuity in NMTC funding generated by the formula used to determine the eligibility of census tracts for investment under the program. We find that the NMTC Program has had modest, but positive impacts on supermarket entry in low-income communities. Based on household-level scanner data, there are no detectable effects on households’ food purchasing patterns in affected neighborhoods, at least in the short run.

NDIS, housing assistance and choice and control for people with disability

A fundamental goal of the NDIS is to maximise participants’ choice and control over which support services they receive, who they receive it from and where it is delivered. The increase in overall funding for disability services, alongside the individualisation of funding—no longer tied to a specific service or home—could potentially enable a large number of NDIS participants to change their accommodation. Many might choose to move from their parents’ home, or from group homes or institutional accommodation, to independent living in the community. However there is an estimated unmet need in affordable housing for between 83 000–122 000 NDIS participants at full rollout of the scheme in 2019. The Productivity Commission’s costings for the NDIS include a ‘user-costs of capital’ component that could, in certain circumstances, be used to subsidise housing for participants. However there is lack of policy clarity about the roles of the NDIS, Commonwealth and state governments in addressing the shortfall in housing for NDIS participants. A demand-side approach to housing assistance for NDIS participants appears more consistent with the scheme’s overarching individualised approach, and best suited to NDIS participants who can access private housing suitable for their needs in most respects perhaps other than affordability. However, supply-side subsidies—integrated with planning, finance and design innovations—can deliver affordable housing that meets the long-term goals and needs of NDIS participants. With appropriate design and location, capital costs of housing development can be recouped through savings on support provision. Well-designed and located housing can deliver additional benefits in terms of economic participation, social inclusion, health and wellbeing. Unless there is an adequate supply of affordable and accessible housing, safeguards are necessary to ensure choice for people with disability. This might include, for example, a separate allocations system in social housing (and possibly choice-based allocation), and advocacy and support to assist people with disability when applying for housing.

Demand-side vs. supply-side technology policies: Hidden treatment and new empirical evidence on the policy mix

This paper provides new empirical evidence about the impact of various technological policies upon firms’ innovative behaviour. We take into consideration the role of policies for innovative activities and we focus on their interaction. While supply-side policies such as R&D subsidies and tax credits have been both extensively discussed in the literature and empirically investigated, the analysis of innovative public procurement is a growing trend in the literature, which still lacks robust empirical evidence. In this paper, we replicate the existing results on supply-side policies, surmise fresh empirical evidence on the outcome of innovative public procurement, and address the issue of possible interaction among the various tools. When controlling for the interaction with other policies, supply-side subsidies cease to be as effective as reported in previous studies and innovative public procurement seems to be more effective than other tools. The preliminary evidence suggests that technology policies exert the highest impact when different policies interact.

Closing the access barrier for effective anti-malarials in the private sector in rural Uganda: consortium for ACT private sector subsidy (CAPSS) pilot study

BackgroundArtemisinin-based combination therapy (ACT), the treatment of choice for uncomplicated falciparum malaria, is unaffordable and generally inaccessible in the private sector, the first port of call for most malaria treatment across rural Africa. Between August 2007 and May 2010, the Uganda Ministry of Health and the Medicines for Malaria Venture conducted the Consortium for ACT Private Sector Subsidy (CAPSS) pilot study to test whether access to ACT in the private sector could be improved through the provision of a high level supply chain subsidy.MethodsFour intervention districts were purposefully selected to receive branded subsidized medicines - “ACT with a leaf”, while the fifth district acted as the control. Baseline and evaluation outlet exit surveys and retail audits were conducted at licensed and unlicensed drug outlets in the intervention and control districts. A survey-adjusted, multivariate logistic regression model was used to analyse the intervention’s impact on: ACT uptake and price; purchase of ACT within 24 hours of symptom onset; ACT availability and displacement of sub-optimal anti-malarial.ResultsAt baseline, ACT accounted for less than 1% of anti-malarials purchased from licensed drug shops for children less than five years old. However, at evaluation, “ACT with a leaf” accounted for 69% of anti-malarial purchased in the interventions districts. Purchase of ACT within 24 hours of symptom onset for children under five years rose from 0.8% at baseline to 26.2% (95% CI: 23.2-29.2%) at evaluation in the intervention districts. In the control district, it rose modestly from 1.8% to 5.6% (95% CI: 4.0-7.3%). The odds of purchasing ACT within 24 hours in the intervention districts compared to the control was 0.46 (95% CI: 0.08-2.68, p=0.4) at baseline and significant increased to 6.11 (95% CI: 4.32-8.62, p<0.0001) at evaluation. Children less than five years of age had “ACT with a leaf” purchased for them more often than those aged above five years. There was no evidence of price gouging.ConclusionsThese data demonstrate that a supply-side subsidy and an intensive communications campaign significantly increased the uptake and use of ACT in the private sector in Uganda.

In Art we trust

Culture is an experience good and has strong externalities. Culture has social value, option value, existence value, innovation value, and intergenerational value. None of these are internalised by the market. One should avoid that culture appeals to a small elite. It is thus crucial to invest in cultural education, to bring culture to places where the people are, and to put a greater emphasis on demand-side rather than supply-side cultural subsidies. One should try to avoid that high culture becomes marginalised in a multicultural society with many demands on leisure time. The government should avoid deadweight losses, but should also minimise the potential for rent seeking and lobbying. It is crucial that the government stays at arm's length and leaves artistic judgements to independent experts and interested laymen.