Subsidies typically reduce welfare by creating market distortions and Gross Domestic Product (GDP) losses. A classic example are fuel subsidies and low 'social' tariffs in developing countries which are meant to help the poor, but largely profit better-off users (because the poorest don't have access to grid power and use less fuel) and lead to inefficient use (by distorting the price signals). However, energy subsidies are often impossible to abolish...
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