undersubsidizing
Undersubsidizing is a term used in public policy and economics to describe a situation in which the subsidy provided for a good or service is set below the level that would maximize social welfare. In contexts with positive externalities or public benefits, the socially optimal subsidy exceeds the private price reduction that the market alone would deliver. When the actual subsidy s is less than this optimal level s*, uptake or provision remains below the desired level, and the full social gains are not realized.
Causes of undersubsidizing include budget constraints and political economy considerations that prioritize other priorities, misestimation of
Consequences can include persistent under-provision or under-consumption of the subsidized good or service, reduced access for
Measurement and design considerations involve comparing the actual subsidy to estimates of the social marginal benefit