Subsidies can have both positive and negative effects on businesses. On the positive side, they can enhance competitiveness, increase market share, and support innovation. For example, subsidies for research and development can lead to technological advancements and improved products. However, subsidies can also distort market dynamics. They can create unfair competition, where subsidized businesses have an advantage over non-subsidized ones. This can lead to inefficiencies and a lack of incentive for businesses to improve their operations or reduce costs.