Subsidisesubsidise

Subsidisesubsidise is a neologism used in public policy and economics to describe the practice of distributing subsidies in multiple layers, effectively subsidising subsidies. The term conveys the idea that public support is channeled not only to direct beneficiaries but also to intermediate actors who in turn provide additional subsidies to others, creating a cascading or recursive flow of aid. While not an established formal category in all policy literatures, subsidisesubsidise is discussed as part of analyses of subsidy stacking and complex financing arrangements.

Mechanisms and patterns commonly cited include: government grants or tax incentives awarded to an intermediary organization that then uses part of the funds to subsidize its own subgrantees or program participants; loan guarantees or subsidized financing provided to lenders who offer below-market loans to project developers, with those projects further benefiting from downstream subsidies or price supports; and state-backed subsidies that are designed to enable further subsidies by private actors within a supply chain. These patterns can raise the overall level of public support for a given activity beyond a single program’s initial allocation.

Potential rationales include addressing market failures, accelerating adoption of new technologies, and leveraging private investment through layered incentives. Critics warn of inefficiency, reduced transparency, and difficulty attributing outcomes to specific interventions. They caution that subsidy cascades can crowd out competition, create governance challenges, and inflate fiscal costs if not carefully monitored.

See also subsidy stacking, cascading subsidies, state aid, and public finance.