According to krugman, the ideal way for a country to respond, when the foreign competitors of its companies are already being supported by government subsidies, is probably not to engage in retaliatory action, but to

The answer is "help establish rules that minimize the use of trade-distorting subsidies."

A subsidy is an advantage given to an individual, business or foundation, normally by the legislature. It is for the most part as a money installment or an assessment decrease. The appropriation is normally given to expel some kind of weight, and usually thought to be in the general enthusiasm of people in general, given to advance a social decent or a monetary approach.  

Exchange volume, costs and course are represented by basic guidelines of interest and supply. Facilitated commerce anticipates that you will contend in a level playing field. Exchange appropriations tilts the exchange to your support. That is the reason such appropriations are called trade distorting subsidies.

answerprotecting competitors;

answermarginal cost;