Description
effectivePrice = marketPrice+subsidy; binds tests effectivePrice < suppliedFloor; gap = max(0,suppliedFloor-effectivePrice).
Policy wedges and boundary checks depend on supplied tax, subsidy and floor conventions. A local difference or triangle approximation can describe the stated model without establishing the actual rule, incidence or full welfare effect.
effectivePrice = marketPrice+subsidy; binds tests effectivePrice < suppliedFloor; gap = max(0,suppliedFloor-effectivePrice).
When to use this tool
Use Subsidy Price Floor Binding Witness when checking a supplied economic-policy contribution or comparison.
How to use the tool and how it works
- Enter marketPrice, suppliedFloor, perUnitSubsidy. Use the units and conventions below.
- Run the tool. Correct any format, range, or cross-field input error before interpreting the output.
- Read effectivePrice, binds, gap. Inspect binds before interpreting the associated values.
Require nonnegative marketPrice, suppliedFloor and perUnitSubsidy. effectivePrice = marketPrice+subsidy; binds tests effectivePrice < suppliedFloor; gap = max(0,suppliedFloor-effectivePrice).1
| Input field | Meaning and units | Accepted input |
|---|---|---|
| marketPrice | Market Price | Required. Finite number; minimum 0. |
| suppliedFloor | Supplied Floor | Required. Finite number; minimum 0. |
| perUnitSubsidy | Per Unit Subsidy | Required. Finite number; minimum 0. |
| Output field | Interpretation | Returned shape |
|---|---|---|
| effectivePrice | Effective Price | Required. Finite number. |
| binds | Binds | Required. Boolean. |
| gap | Signed difference from the stated reference, using compatible units. | Required. Finite number. |
{
"input": {
"marketPrice": 8,
"suppliedFloor": 12,
"perUnitSubsidy": 2
},
"output": {
"effectivePrice": 10,
"binds": true,
"gap": 2
}
}Limitations and assumptions
- Equality is nonbinding here. This local comparison does not solve market equilibrium, verify subsidy eligibility or establish an actual legal floor.
- Inputs must satisfy both the field types and the cross-field conditions above. Invalid input causes an error; a successful false flag or documented placeholder is a different result.
- Numeric calculations use binary floating point unless exact decimal-integer arithmetic is explicitly stated. No hidden measurement tolerance or decimal rounding is added; nonfinite or out-of-contract results are rejected. Numeric signed-zero results are exported as zero.
Alternative or Complementary methods
Consult the actual policy and a suitable complete equilibrium and welfare analysis before interpreting a local term as a policy outcome.
References
Similar or alternative tools
- Net Tax Budget Line Slope
Return both net prices and slope = -firstNetPrice/secondNetPrice.
- Marginal Rate Wedge
observedWedge = firstMarginalRate-secondMarginalRate; unexplainedWedge subtracts suppliedTaxWedge.