The Failure of Government-Sponsored Cartels and Development of Federal Farm Policy

Elizabeth Hoffman and Gary Libecap

Economic Inquiry, 1995, vol. 33, issue 3, 365-82

Abstract: While economists recognize that private cartels are difficult to sustain, they are too sanguine about the prospects for government-assisted cartels. Although the state's coercive power would seem to make it an effective enforcer of cartel agreements, the political costs of enforcement can be high if segments of the industry resist. The government's solution lies in alternative strategies for raising prices. Examining government efforts to organize an orange cartel in the 1930s, the authors find that farmers' opposition to output cuts and quota assignments because of their distributional effects forced a policy shift to purchases of 'excess stocks.' Copyright 1995 by Oxford University Press.

Date: 1995
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