Export Subsidy, Large Country, Exportable Product
(Figure 11.4)

The graph above illustrates a country that is large enough to affect the world price of steel pipes. With free trade, the world price is $100 per pipe. When the exporting country's government offers an export subsidy of $20 per pipe, exporting firms want to export more to get more of the subsidy. To get foreign consumers to buy more of the exported product, the exporting firms must lower the export price. Just as in the small-country case, once the subsidy is imposed domestic consumers pay $20 more than the export price (assuming that they cannot import from the rest of the world at the new world price.)
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