How do government subsidies typically affect competition in the market?

Government subsidies are financial support that the government gives to certain businesses or industries. These subsidies can lower the cost of production for those companies, allowing them to sell their products at lower prices. When a business can sell its products cheaper because of subsidies, it may attract more customers, which can make it harder for other companies that do not receive subsidies to compete. For example, if a local farmer receives a subsidy to grow corn, they can sell their corn for less than a farmer who doesn’t receive any financial help. This can lead to less competition in the market, as the subsidized farmer may dominate sales, pushing others out or forcing them to lower their prices, which can hurt their profits.