Public Subsidies and Policy Failures – How Subsidies Distort the Natural Environment, Equity and Trade and How to Reform Them

The allocation of subsidies is often regarded as a fundamental role of governments in order to realise and maintain benefits to society. The possibility that public subsidies could actually be counterproductive contradicts common perception. The authors of this challenging book present recent evidence which, in their view, suggests that subsidies may in fact turn out to be a contemporary plague.

Public Subsidies and Policy Failures provides extensive analysis of the theory and political economy of public support policies, demonstrating how subsidies can harm the environment, distort trade, and benefit those in society who do not require support. Furthermore, they often fail to achieve the desired and expected goals. The authors employ a theoretical framework to illustrate the impact of subsidies on developed and developing economies, as well as on international trade. They examine public subsidies in various natural resource and industrial sectors and discover that many turn out to be policy failures. They also investigate the various barriers and lock-in mechanisms by which subsidies become entrenched in economic and political structures. The book goes on to propose concrete actions, policy strategies and international 'Grand Deals' which will engender effective subsidy reforms.

Scholars, researchers and students will welcome this rigorous investigation into the political and economic costs and benefits of public subsidies. International trade organisations and policymakers will also benefit from the strategic emphasis.

Cees van Beers, Professor of Innovation Economics and Management, Faculty of Technology, Policy and Management, Delft University of Technology, and Co-leader, International Centre for Frugal Innovation, Leiden-Delft-Erasmus Universities and André de Moor, Deputy Head of International Environmental Assessment Division, RIVM National Institute of Public Health and Environment, the Netherlands