Production subsidies level the playing field for public and private firms.
The article explores how subsidies affect competition between public and private companies selling different types of goods. They look at three scenarios: firms setting prices independently, the public firm leading the way, and both firms maximizing profits at the same time. The study shows that with the right subsidies, both firms make the same profits, set the same prices, produce the same amount, and benefit the economy equally, no matter what kind of goods they sell.