How do subsidies impact market efficiency in the context of competition policy?

Subsidies are financial supports given by the government to help businesses or industries, which can affect how efficiently a market operates. When a government provides subsidies, it can lower the costs for producers, encouraging them to produce more goods. This might seem positive because it can make products cheaper for consumers, but it can also lead to market inefficiency. For example, if a government gives a subsidy to a corn farmer, that farmer might produce corn even when it's not the best use of resources, rather than letting other crops that could be more beneficial flourish. In this way, while subsidies can help certain sectors, they can distort competition and lead to an overall less efficient market.