ABSTRACT
Chapter 8 was about various forms of taxes or charges. The “other kind” of price instrument is often said to be a subsidy. Although these two instruments may seem to be worlds apart to a layperson, economists tend to think of subsidies as similar to taxes. They can be partly analyzed as negative taxes, and some reflection shows that they are indeed similar in many superficial respects but that there are also crucial differences between fees and subsidies.
