An economic tool implemented primarily by governments, a financial aid mechanism aims to lower the cost of production or consumption. This assistance allows producers to offer goods or services at prices below the actual cost of production. A common example is agricultural support, where payments to farmers enable them to sell crops at reduced rates, potentially benefiting consumers through lower food prices.
This type of intervention can stimulate economic activity in specific sectors, encourage innovation, and ensure the availability of essential goods or services. Historically, subsidies have been used to promote domestic industries, protect them from foreign competition, and achieve social objectives such as providing affordable housing or healthcare.
