What makes a smart subsidy different from subsidies

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Reference no: EM132178288

Question: 1. Interpret the expression "subsidize the institution, not the customer" and briefly describe this strategy. To what extent does it make sense as a matter of logic? As a guide for action?

2. What makes a smart subsidy different from subsidies that have long been used to subsidize rural credit in low-income areas?

3. It makes sense for microfinance institutions to be subsidized during their first years of operation. Subsidies lend support for microfinance institutions to reap economies of scale, which in turn enables institutions to operate at lower costs and become self-sufficient. Provide at least one convincing argument against this type of subsidy.

Reference no: EM132178288

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