Export Subsidy, Small Country, Exportable Product
(Figure 11.3)

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.