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Economic Definition of subsidy. Offline Version: PDF. Term subsidy Definition: A payment from government to individuals or businesses without any expectations of production. The best way of thinking about a subsidy is as a negative tax.
is the production of a good or service by a public authority that receives the bulk of its revenue from the government. 2. A . subsidy. is a payment that the government makes to the private producer that depends on the level of output. The subsidy reduces the producerâs costs and increases the production of the good. 3. A . voucher