This document shows how an export subsidy impacts the price of exports. With an export subsidy, supply shifts right from S to S+subsidy, lowering the export price from P to P1. The subsidy per unit is the vertical distance between the original price P and the subsidized price P1. The export subsidy increases the quantity of exports from Q1 to Q2.

1. PL2
D
S
Q
PL
Stariff2
Q3 Q4
Stariff1
PL1
Q1 Q2

2. Price of
exports
Quantity
of exports
D
P
S +
subsidy
S
P1
Unit subsidy
Impact of export subsidy on price of exports (vertical distance = subsidy
per unit)