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The domestic supply and demand curves for hockey sticks are SdSd and DdDd. The international market price for hockey sticks is Sd₁Sd₁ and at this price consumers demand 0Q₃. Domestic producers will supply 0Q₁ to the market and imports will be Q₁Q₃

If the government provides a subsidy of AB per unit to the industry production costs are reduced and the supply curve moves for SdSd to OP₁ .

Domestic producers of hockey sticks are now willing to supply 0Q₂ to the market at a price of 0P₁. As a result of the subsidy imports will decrease from Q₁Q₃ to Q₂Q₃

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