- Concept: Government transfers a certain amount of money to the public.
- Recipients are free to decide what to do with that money.
- Difference from Price Subsidies:
- Freedom of Use: Income support allows beneficiaries to spend freely; price subsidies are for specific items.
- Market Distortion: Income support does not distort the market; price subsidies do.
- Purchase Requirement: Income support does not require purchasing specific items; price subsidies do.
- Targeting: Income support can be for a class of population or universal; price subsidies are for specific products.