Indirect subsidies

To further stimulate the drive to safer substitutes, a fee could be levied on users of all authorised chemicals. This fee could be used to centralise and disseminate information on alternatives, and fund research. At the same time, any direct or indirect subsidies and tax exemptions to the chemical industry should be withdrawn. 

It must be noted that within the United States all projects to harvest wind energy on an intensive scale are heavily subsidizes. Some of the subsidies are direct, as grants from the Federal or state Governments for the construction of the facility. Others subsidies are indirect. These indirect subsidies are in the form of regulations that require power grid operators to accept, and pay for, power generated by the wind harvesting facility. It is likely that similar subsidies are in use in nations out side the United States. 

Subsidies are given only to accredited providers. Governments may provide subsidies only to providers who can demonstrate that they meet certain quality standards. This limits choice for patients, but if successful it can ensure that they receive better service. The benefits of including some form of accreditation with subsidies accrue directly and indirecdy— direcdy by ensuring that the subsidized services meet certain standards, indirectly by creating an incentive for providers to raise their service standards to meet the requirements for accreditation. As under the second scenario, supply-side—but not demand-side—subsidies have a tendency to undermine the incentive to improve efficiency and patient-perceived quality, particularly if they are large in relation to total provider revenue. 

The indirect effects are difficult to measure, and there is a lack of research on the subject. No Danish empirical analyses show the connections between activation and the participation rate. The substitution effect has most thoroughly been analysed with Swedish data (Calmfors et al. 2001), but a quite new Danish study makes an attempt to clarify the phenomenon. Hussain and Rasmussen (2007) measure a substitution effect of 0.4. This means that the number of ordinary employees falls by 0.4 every time a person is employed in a wage subsidy scheme. 

Among other tax credits of the Federal Tax Code, two provisions are of particular relevance to the pharmaceutical industry the foreign tax credit system and the possessions tax credit. While these credits do not represent direct subsidies to the firm s R D costs, there are at least two reasons to consider their importance for pharmaceutical R D. First, they indirectly affect the location and amount of R D. These credits affect the after-tax cost of doing business in political jurisdictions outside the United States. Second, they affect pharmaceutical firms returns to R D. 

This chapter describes direct Federal contributions to the pharmaceutical knowledge base as well as indirect support through its funding of the biomedical research and trainin g infrastructure. In addition to assessing the extent of such Federal subsidies, this chapter describes how federally funded knowledge produced in academic institutes and government laboratories is transferred to pharmaceutical companies. 

The impact of price subsidy programs on consumers real income is equivalent to the sum of direct and indirect reductions in the prices of the commodities consumed, which depends greatly on the incidence of participation as measured by actual consumption levels. 

The need for compensation will depend in part on the pattern of benefits of the program to be reformed—that is, who it reached and how important the program was to them. In the case of food subsidy reforms, the poor often receive a low share of the absolute benefits, but these low benefits are nonetheless an improvement in their welfare. Sometimes, however, the poor have benefited little from the subsidy to be reduced, for example, if electricity were subsidized but the poor were not connected to the grid. An indirect feature of the needs assessment (see chapter 9 for guidance on how to carry out a needs assessment) concerns the political economy of reform. Is there consensus on the need for reform or not Who opposes it and why Would a compensatory targeted cash transfer help make the reform more acceptable ... 

Universal, indirect price support for food. Open-ended, untargeted subsidies that aim to lower the price the general population pays for staple foods. 

Barriers to trade (or protectionist measures) imposed by commodity importing countries can come in different forms, and may have varying motives which are not always easily discernible. The usual distinction is between tariff barriers (which discourage imports by raising their price) and non-tariff barriers. The latter include direet restrictions on imports, and those which act indirectly, like measures to promote domestic production. Commodity producing countries may, alternatively, try to improve the competitiveness of their exports (through subsidies, for example) or institute policies which restrict them. 

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