Households (i.e. demand)—rather than financial institutions or developers (supply)—receive
the subsidy and can choose among different types of units in different locations (Conway et al.,
1996). When subsidies are delivered to supply—as they still are in many countries—these
providers of units or finance have a captive audience. In effect, households must choose their
product in order to receive the subsidy. In such cases, developers and financial institutions
invariably absorb a large part of the subsidy (and tend to produce shoddy units in poor locations),
rather than pass it on to households. Hence, the ability of households to shop among many
different housing solutions with the subsidy (portability) is key to many of the benefits of direct
demand programs.