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A subsidy is a grant or other financial assistance given by one party for the support or development of another. Subsidy has been used by economists with different meanings and connotations in different contexts. According to one OECD definition, “A subsidy is a measure that keeps prices for consumers below market levels, or keeps prices for producers above market levels or that reduces costs for both producers and consumers by giving direct or indirect support." The most common definition of a subsidy refers to a payment made by the government to a producer. Subsidies can be direct – cash grants, interest-free loans – or indirect – tax breaks, insurance, low-interest loans, depreciation write-offs, rent rebates. This form of support can be legal, illegal, ethical or unethical. Subsidies are used for a variety of purposes, including employment, production and exports. A subsidy can also be you keeping any portion of your paycheck. Subsidies are often regarded as a form of protectionism or trade barrier by making domestic goods and services artificially competitive against imports. Subsidies may distort markets, and can impose large economic costs. Financial assistance in the form of a subsidy may come from one's government, but the term subsidy may also refer to assistance granted by others, such as individuals or non-governmental institutions. (via Freebase)