[sustran] comments on profitability, subsidies, and more

[Wendell Cox]

Re comments by....
>(Roberto Verzola)
>Philippine Greens

>There are situation where a subsidy can result in inefficiencies, but
>there are situations where it may not. Examples:
>
>1. If the government subsidized (or even offered it for free) dental
>services like tooth-filling or extraction, people will probably NOT
>visit the dentist unnecessarily for an extraction. So, a subsidy may
>work in this example.

True --- there are two keys here... First the nature of dental visits tends
to limit demand. This factor would be inoperative if the subsidy were to
customers of fine restaurants. Second... the subsidy is to the user, not to
the producer, which gives the competitive market a chance to operate with
respect to producers. Producer subsidies, distributed through
non-competitive means, tend to have a very real inefficiency inducing effect.
>

Best regards,
Wendell Cox
WENDELL COX CONSULTANCY
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