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# Bounty

## Definition

A government subsidy paid to merchants or manufacturers to encourage the
exportation of specific goods, designed to make domestic products more
competitive in foreign markets by compensating for selling below cost price.

## Source Chapter

Book IV, Chapter 5

## Context

Smith's central focus in this chapter is critiquing the mercantile system's
use of bounties as a means of enriching the nation through the balance of
trade. He argues that bounties force trade into less advantageous channels
and that they cannot genuinely lower the price of commodities in the home
market.

## Economic Domain

Regulation

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