766 B
766 B
Bounty
Definition
A government subsidy paid to merchants or manufacturers to encourage the exportation of specific goods, designed to make domestic products more competitive in foreign markets by compensating for selling below cost price.
Source Chapter
Book IV, Chapter 5
Context
Smith's central focus in this chapter is critiquing the mercantile system's use of bounties as a means of enriching the nation through the balance of trade. He argues that bounties force trade into less advantageous channels and that they cannot genuinely lower the price of commodities in the home market.
Economic Domain
Regulation