Mingbu: refers to the cash subsidy that consumers get from the government because of the price increase of products. Mingbu does not change commodity prices. Undercover: refers to the subsidy that consumers get when they buy goods at a price below the market equilibrium.
Because consumers don't get subsidies through direct visible forms, they only enjoy subsidies when they buy subsidized goods, so this form of subsidies is called "hidden subsidies". Undercover will change the price of goods.
The relationship between implicit compensation and explicit compensation
Mingbu is equal to a sum of income given to the subsidy object in the form of increasing income, such as grain and oil subsidies, transportation subsidies, housing subsidies, etc. After consumers accept Ming Bu, the commodity prices they face are unchanged relative prices.
Implicit supplement appears in one or several special commodities, which often leads to double prices of commodities: market price and subsidy price, which are generally coordinated with the ticket system. Undercover enables consumers to obtain a commodity at a price below the market.
Because consumers don't get subsidies through direct visible forms, they only enjoy subsidies when they buy subsidized goods, so this form of subsidies is called "hidden subsidies". After accepting implicit subsidies, consumers will face changing relative prices, and consumers will increase their consumption of subsidized goods.
The change of budget constraint line caused by implicit salary has produced substitution effect and income effect. If the amount of subsidies is the same, explicit subsidies can make consumers reach a higher level of utility than implicit subsidies.
To sum up, Ming Bu does not change the relative price between commodities, but only produces income effect, and will not bring efficiency loss, while dark Bu changes the relative price between commodities while enhancing consumers' purchasing power, resulting in income effect and substitution effect. Therefore, dark Bu will bring efficiency loss.
Although explicit subsidies are more efficient than implicit subsidies, explicit subsidies are subsidies for all commodities, and it is difficult to pay attention to the poor through subsidies for specific commodities such as food. Implicit subsidies have advantages that explicit subsidies do not have, and can help the government achieve specific rescue goals.
The price paid by consumers under implicit subsidies is the market price, while the subsidized commodity prices under implicit subsidies cannot reflect the relationship between supply and demand in the market, and even the phenomenon of limited supply due to insufficient supply may occur. The voting system was born under such circumstances.
The similarity between ticket system and secret supplement is that they both buy goods at preferential prices. The difference is that there is no limit on the purchase amount of implicit compensation, while there is a limit on the purchase amount of tickets.