Export Subsidy, Small Country, Exportable Product
(Figure 10.3)

The government of this country then decides to offer to its firms an export subsidy of $20 per pipe. Press the "Show Subsidy" button below to illustrate the subsidy on the graph. The revenue per pipe exported then is $120, equal to the $100 price paid by foreign buyers plus the $20 subsidy. If the pipe firm can get $120 for each pipe exported, it will not sell to any domestic buyer at a price lower than $120. However, something must separate the domestic and foreign markets so that domestic buyers cannot just buy imported pipes from the world market at $100. Press "Continue" when you are ready to move on. The "Reset" button will clear the graph.
Press "Continue" when you are ready to move on. The "Reset" button will clear the graph.