Government Intervention in the Market. Government Intervention in the Market The Control of Prices.

Government Intervention in the Market

Government Intervention in the Market The Control of Prices

THE CONTROL OF PRICES Equilibrium price and the absence of shortages and surpluses Minimum prices –justification –effects Equilibrium price and the absence of shortages and surpluses Minimum prices –justification –effects

Minimum price: price floor P QO PePe S D

P QO PePe minimum price QdQd QsQs S D surplus

THE CONTROL OF PRICES Minimum prices –justification –effects –dealing with resulting surpluses Minimum prices –justification –effects –dealing with resulting surpluses

Maximum price: price ceiling P QO PePe S D

P QO PePe S D QsQs QdQd maximum price shortage

THE CONTROL OF PRICES Minimum prices –justification –effects –dealing with resulting surpluses Maximum prices Minimum prices –justification –effects –dealing with resulting surpluses Maximum prices

THE CONTROL OF PRICES Minimum prices –justification –effects –dealing with resulting surpluses Maximum prices –justification Minimum prices –justification –effects –dealing with resulting surpluses Maximum prices –justification

THE CONTROL OF PRICES Minimum prices –justification –effects –dealing with resulting surpluses Maximum prices –justification –effects Minimum prices –justification –effects –dealing with resulting surpluses Maximum prices –justification –effects

THE CONTROL OF PRICES Minimum prices –justification –effects –dealing with resulting surpluses Maximum prices –justification –effects –dealing with resulting shortages Minimum prices –justification –effects –dealing with resulting surpluses Maximum prices –justification –effects –dealing with resulting shortages

THE CONTROL OF PRICES Minimum prices –justification –effects –dealing with resulting surpluses Maximum prices –justification –effects –dealing with resulting shortages –rationing Minimum prices –justification –effects –dealing with resulting surpluses Maximum prices –justification –effects –dealing with resulting shortages –rationing

THE CONTROL OF PRICES Minimum prices –justification –effects –dealing with resulting surpluses Maximum prices –justification –effects –dealing with resulting shortages –rationing –black markets Minimum prices –justification –effects –dealing with resulting surpluses Maximum prices –justification –effects –dealing with resulting shortages –rationing –black markets

P Q O PePe D S Effect of price control on black-market prices

P Q O PgPg PePe D S

P Q O PgPg PePe QsQs QdQd D S

P Q O PbPb PgPg PePe QsQs QdQd D S

Government Intervention in the Market Indirect Taxes

INDIRECT TAXES Specific and ad valorem taxes Effects on supply curve Specific and ad valorem taxes Effects on supply curve

S P Q O Effect of a tax on the supply curve

S + specific tax S amount of specific tax P Q O Effect of a tax on the supply curve

S + ad valorem tax S P Q O Effect of a tax on the supply curve

INDIRECT TAXES Specific and ad valorem taxes Effects on supply curve The incidence of taxation Specific and ad valorem taxes Effects on supply curve The incidence of taxation

INDIRECT TAXES Specific and ad valorem taxes Effects on supply curve The incidence of taxation –the producers' share –the consumers' share Specific and ad valorem taxes Effects on supply curve The incidence of taxation –the producers' share –the consumers' share

S P Q O P1P1 Q1Q1 D Effect of a tax on price and quantity

S + tax S O P 1 + tax P1P1 P2P2 Q1Q1 Q2Q2 D P Q Effect of a tax on price and quantity

INDIRECT TAXES Specific and ad valorem taxes Effects on supply curve The incidence of taxation –the producers' share –the consumers' share Elasticity and the incidence of taxation Specific and ad valorem taxes Effects on supply curve The incidence of taxation –the producers' share –the consumers' share Elasticity and the incidence of taxation

S + tax S O P1P1 Q1Q1 D P Q Incidence of tax: inelastic demand

S + tax S O P1P1 P2P2 Q2Q2 Q1Q1 D P Q Incidence of tax: inelastic demand

S + tax S O P1P1 P2P2 Q2Q2 Q1Q1 D CONSUMERS’ SHARE CONSUMERS’ SHARE P 2 - t PRODUCERS’ SHARE P Q Incidence of tax: inelastic demand

S + tax S O P1P1 Q1Q1 D P Q Incidence of tax: elastic demand

S + tax S O P1P1 P2P2 Q1Q1 D Q2Q2 P Q Incidence of tax: elastic demand

S + tax S O P1P1 P2P2 Q2Q2 Q1Q1 D CONSUMERS’ SHARE CONSUMERS’ SHARE P Q Incidence of tax: elastic demand

S + tax S O P 2 - t P1P1 P2P2 Q2Q2 Q1Q1 D CONSUMERS’ SHARE CONSUMERS’ SHARE PRODUCERS’ SHARE PRODUCERS’ SHARE P Q Incidence of tax: elastic demand

S + tax S O P1P1 Q1Q1 D P Q Incidence of tax: inelastic supply

S + tax S O P1P1 P2P2 Q1Q1 D Q2Q2 P Q Incidence of tax: inelastic supply

S + tax S O P1P1 P2P2 Q2Q2 Q1Q1 D P Q CONSUMERS’ SHARE Incidence of tax: inelastic supply

S + tax S O P 2 - t P1P1 P2P2 Q2Q2 Q1Q1 D P Q CONSUMERS’ SHARE PRODUCERS’ SHARE Incidence of tax: inelastic supply

S + tax P Q O P1P1 Q1Q1 D S Incidence of tax: elastic supply

S + tax P Q O P1P1 P2P2 Q1Q1 D Q2Q2 S Incidence of tax: elastic supply

S + tax P Q O P1P1 P2P2 Q2Q2 Q1Q1 D S CONSUMERS’ SHARE CONSUMERS’ SHARE Incidence of tax: elastic supply

S + tax P Q O P 2 - t P1P1 P2P2 Q2Q2 Q1Q1 D S CONSUMERS’ SHARE CONSUMERS’ SHARE PRODUCERS’ SHARE PRODUCERS’ SHARE Incidence of tax: elastic supply

INDIRECT TAXES Specific and ad valorem taxes Effects on supply curve The incidence of taxation –the producers' share –the consumers' share Elasticity and the incidence of taxation Implications for tax policy Specific and ad valorem taxes Effects on supply curve The incidence of taxation –the producers' share –the consumers' share Elasticity and the incidence of taxation Implications for tax policy

Government Intervention in the Market Government Rejection of Market Allocation

Providing goods free to consumers –justification –effects –the case of health care problems of shortages Providing goods free to consumers –justification –effects –the case of health care problems of shortages GOVERNMENT REJECTION OF MARKET ALLOCATION

P Q S D P0P0 QsQs QdQd shortage The demand for and supply of hospital treatment

P Q PePe S D P0P0 QsQs QdQd shortage The demand for and supply of hospital treatment

Providing goods free to consumers –justification –effects –the case of health care problems of shortages methods of dealing with shortages Providing goods free to consumers –justification –effects –the case of health care problems of shortages methods of dealing with shortages GOVERNMENT REJECTION OF MARKET ALLOCATION

Providing goods free to consumers –justification –effects –the case of health care problems of shortages methods of dealing with shortages Making products illegal Providing goods free to consumers –justification –effects –the case of health care problems of shortages methods of dealing with shortages Making products illegal GOVERNMENT REJECTION OF MARKET ALLOCATION

Providing goods free to consumers –justification –effects –the case of health care problems of shortages methods of dealing with shortages Making products illegal –justification Providing goods free to consumers –justification –effects –the case of health care problems of shortages methods of dealing with shortages Making products illegal –justification GOVERNMENT REJECTION OF MARKET ALLOCATION

Providing goods free to consumers –justification –effects –the case of health care problems of shortages methods of dealing with shortages Making products illegal –justification –the market for illegal products Providing goods free to consumers –justification –effects –the case of health care problems of shortages methods of dealing with shortages Making products illegal –justification –the market for illegal products GOVERNMENT REJECTION OF MARKET ALLOCATION

Providing goods free to consumers –justification –effects –the case of health care problems of shortages methods of dealing with shortages Making products illegal –justification –the market for illegal products comparison with legal prices Providing goods free to consumers –justification –effects –the case of health care problems of shortages methods of dealing with shortages Making products illegal –justification –the market for illegal products comparison with legal prices GOVERNMENT REJECTION OF MARKET ALLOCATION

P Q P legal S legal D legal Q legal O The market for an illegal drug

P Q P legal S legal D legal Q legal S illegal O The market for an illegal drug

P Q P legal S legal D legal Q legal S illegal D illegal O The market for an illegal drug

P Q P legal S legal D legal Q legal S illegal D illegal P illegal Q illegal O The market for an illegal drug

GOVERNMENT REJECTION OF MARKET ALLOCATION Providing goods free to consumers –justification –effects –the case of health care problems of shortages methods of dealing with shortages Making products illegal –justification –the market for illegal products comparison with legal prices –comparison of prohibition and taxation Providing goods free to consumers –justification –effects –the case of health care problems of shortages methods of dealing with shortages Making products illegal –justification –the market for illegal products comparison with legal prices –comparison of prohibition and taxation

Providing goods free to consumers –justification –effects –the case of health care problems of shortages methods of dealing with shortages Making products illegal –justification –the market for illegal products comparison with legal prices –comparison of prohibition and taxation effects on demand and supply Providing goods free to consumers –justification –effects –the case of health care problems of shortages methods of dealing with shortages Making products illegal –justification –the market for illegal products comparison with legal prices –comparison of prohibition and taxation effects on demand and supply GOVERNMENT REJECTION OF MARKET ALLOCATION

Providing goods free to consumers –justification –effects –the case of health care problems of shortages methods of dealing with shortages Making products illegal –justification –the market for illegal products comparison with legal prices –comparison of prohibition and taxation effects on demand and supply effects on price Providing goods free to consumers –justification –effects –the case of health care problems of shortages methods of dealing with shortages Making products illegal –justification –the market for illegal products comparison with legal prices –comparison of prohibition and taxation effects on demand and supply effects on price GOVERNMENT REJECTION OF MARKET ALLOCATION

Government Intervention in the Market Agriculture and Agricultural Policy

AGRICULTURE AND AGRICULTURAL POLICY Why governments intervene in agriculture –to reduce price fluctuations –to raise farm incomes –to protect rural communities –to encourage greater self-sufficiency in food Causes of short-term price fluctuations –fluctuations in the harvest –low price elasticity of demand Why governments intervene in agriculture –to reduce price fluctuations –to raise farm incomes –to protect rural communities –to encourage greater self-sufficiency in food Causes of short-term price fluctuations –fluctuations in the harvest –low price elasticity of demand

Source: National Food Survey 2000 (National Statistics, 2001), extracted from Tables 6.1, 6.3, 6.4 and 6.5 Elasticities of demand for various foodstuffs (UK)

P QO P1P1 D Sa1Sa1 Inelastic demand for food

P QO P1P1 P2P2 D Sa1Sa1 Sa2Sa2

AGRICULTURE AND AGRICULTURAL POLICY Why governments intervene in agriculture –to reduce price fluctuations –to raise farm incomes –to protect rural communities –to encourage greater self-sufficiency in food Causes of short-term price fluctuations –fluctuations in the harvest –low price elasticity of demand Causes of declining farm incomes Why governments intervene in agriculture –to reduce price fluctuations –to raise farm incomes –to protect rural communities –to encourage greater self-sufficiency in food Causes of short-term price fluctuations –fluctuations in the harvest –low price elasticity of demand Causes of declining farm incomes

AGRICULTURE AND AGRICULTURAL POLICY Why governments intervene in agriculture –to reduce price fluctuations –to raise farm incomes –to protect rural communities –to encourage greater self-sufficiency in food Causes of short-term price fluctuations –fluctuations in the harvest –low price elasticity of demand Causes of declining farm incomes –low income elasticity of demand Why governments intervene in agriculture –to reduce price fluctuations –to raise farm incomes –to protect rural communities –to encourage greater self-sufficiency in food Causes of short-term price fluctuations –fluctuations in the harvest –low price elasticity of demand Causes of declining farm incomes –low income elasticity of demand

AGRICULTURE AND AGRICULTURAL POLICY Why governments intervene in agriculture –to reduce price fluctuations –to raise farm incomes –to protect rural communities –to encourage greater self-sufficiency in food Causes of short-term price fluctuations –fluctuations in the harvest –low price elasticity of demand Causes of declining farm incomes –low income elasticity of demand –increases in supply Why governments intervene in agriculture –to reduce price fluctuations –to raise farm incomes –to protect rural communities –to encourage greater self-sufficiency in food Causes of short-term price fluctuations –fluctuations in the harvest –low price elasticity of demand Causes of declining farm incomes –low income elasticity of demand –increases in supply

Source: Agriculture in the European Union, European Economy (European Commission) Yields of selected crops (100 kg/hectare)

Source: National Food Survey 2000 (National Statistics, 2001), extracted from Tables 6.1, 6.3, 6.4 and 6.5 Elasticities of demand for various foodstuffs (UK)

P QO P1P1 D1D1 S1S1 Q1Q1 Decline in food prices over time

P QO P1P1 S2S2 D2D2 P2P2 Q1Q1 Q2Q2 D1D1 S1S1

AGRICULTURE AND AGRICULTURAL POLICY Types of government intervention in agriculture –buffer stocks –subsidies –high fixed prices –reducing supply –structural policies Buffer stocks –buffer stocks to stabilise prices Types of government intervention in agriculture –buffer stocks –subsidies –high fixed prices –reducing supply –structural policies Buffer stocks –buffer stocks to stabilise prices

P QO PgPg D QdQd Buffer stocks to stabilise prices

P QO PgPg D Sa1Sa1 Qs1Qs1 QdQd Bought into buffer stock Buffer stocks to stabilise prices

P QO PgPg D Qs2Qs2 QdQd Released from buffer stock Sa2Sa2 Buffer stocks to stabilise prices

AGRICULTURE AND AGRICULTURAL POLICY Types of government intervention in agriculture –buffer stocks –subsidies –high fixed prices –reducing supply –structural policies Buffer stocks –buffer stocks to stabilise prices –buffer stocks to stabilise farm incomes Types of government intervention in agriculture –buffer stocks –subsidies –high fixed prices –reducing supply –structural policies Buffer stocks –buffer stocks to stabilise prices –buffer stocks to stabilise farm incomes

P QO D a P1P1 Buffer stocks to stabilise incomes

P QO D Y a P1P1 P  d =  1 Buffer stocks to stabilise incomes

P QO D Sa2Sa2 Q2Q2 Q1Q1 Sa1Sa1 Y a P1P1

P QO D Sa2Sa2 Q2Q2 Q1Q1 Sa1Sa1 Y a P1P1 P2P2

P QO D Sa2Sa2 Q2Q2 Q1Q1 Sa1Sa1 Q2Q2 Y a P1P1 P2P2 P2P2 b c Bought into buffer stock Buffer stocks to stabilise incomes

P QO D Sa3Sa3 Q3Q3 Q1Q1 Sa1Sa1 Y a P1P1

P QO D Sa3Sa3 Q3Q3 Q1Q1 Sa1Sa1 Y a P1P1 P3P3

P QO D Sa3Sa3 Q3Q3 Q1Q1 Sa1Sa1 Q3Q3 Y a P1P1 P3P3 P3P3 d e Released from buffer stock Buffer stocks to stabilise incomes

AGRICULTURE AND AGRICULTURAL POLICY Subsidies –effects on price and output –the incidence of a subsidy Subsidies –effects on price and output –the incidence of a subsidy

Effect of subsidies on foodstuffs in which the country is self-sufficient P QO D QeQe PePe S

P QO D QeQe PePe S + subsidy S Effect of subsidies on foodstuffs in which the country is self-sufficient

P QO D Q1Q1 QeQe PePe PmPm S + subsidy S Effect of subsidies on foodstuffs in which the country is self-sufficient

P QO D Q1Q1 QeQe PePe PgPg PmPm S + subsidy S Subsidy Effect of subsidies on foodstuffs in which the country is self-sufficient

Effect of subsidies on foodstuffs which are partly imported P Q O D PwPw S domestic S world

P Q O D PwPw S domestic S world QS1QS1 QdQd Imports Effect of subsidies on foodstuffs which are partly imported

P Q O D QdQd PwPw QS2QS2 S + subsidy S domestic S world QS1QS1 Imports Effect of subsidies on foodstuffs which are partly imported

P Q O D QS2QS2 QdQd PwPw PgPg S + subsidy S domestic S world QS1QS1 Effect of subsidies on foodstuffs which are partly imported

AGRICULTURE AND AGRICULTURAL POLICY Subsidies –effects on price and output –the incidence of a subsidy High minimum prices Subsidies –effects on price and output –the incidence of a subsidy High minimum prices

AGRICULTURE AND AGRICULTURAL POLICY Subsidies –effects on price and output –the incidence of a subsidy High minimum prices –foodstuffs where the country is a net importer Subsidies –effects on price and output –the incidence of a subsidy High minimum prices –foodstuffs where the country is a net importer

Minimum price where some of the product is imported P Q O PwPw EU supply QS1QS1 Qd1Qd1 EU demand Imports

P Q O PwPw PtPt EU supply QS1QS1 Qd1Qd1 EU demand Import levy Minimum price where some of the product is imported

AMOUNT PAID IN IMPORT LEVIES AMOUNT PAID IN IMPORT LEVIES P Q O QS2QS2 PwPw PtPt EU supply QS1QS1 Qd1Qd1 EU demand Import levy Imports Qd2Qd2 Minimum price where some of the product is imported

AGRICULTURE AND AGRICULTURAL POLICY Subsidies –effects on price and output –the incidence of a subsidy High minimum prices –foodstuffs where the country is a net importer –foodstuffs where the country is self-sufficient Subsidies –effects on price and output –the incidence of a subsidy High minimum prices –foodstuffs where the country is a net importer –foodstuffs where the country is self-sufficient

P Q O QS1QS1 Qd1Qd1 D EU S EU PwPw b a Exports Minimum prices for a product where the EU is self-sufficient

COST REVENUE FROM SALE OF SURPLUS ON WORLD MARKET P Q O QS2QS2 PwPw PiPi S EU QS1QS1 Qd2Qd2 Qd1Qd1 D EU a b f c Surplus NET COST Intervention price d e Minimum prices for a product where the EU is self-sufficient

AGRICULTURE AND AGRICULTURAL POLICY Subsidies –effects on price and output –the incidence of a subsidy High minimum prices –foodstuffs where the country is a net importer –foodstuffs where the country is self-sufficient Reductions in supply Subsidies –effects on price and output –the incidence of a subsidy High minimum prices –foodstuffs where the country is a net importer –foodstuffs where the country is self-sufficient Reductions in supply

AGRICULTURE AND AGRICULTURAL POLICY Subsidies –effects on price and output –the incidence of a subsidy High minimum prices –foodstuffs where the country is a net importer –foodstuffs where the country is self-sufficient Reductions in supply –quotas Subsidies –effects on price and output –the incidence of a subsidy High minimum prices –foodstuffs where the country is a net importer –foodstuffs where the country is self-sufficient Reductions in supply –quotas

AGRICULTURE AND AGRICULTURAL POLICY Subsidies –effects on price and output –the incidence of a subsidy High minimum prices –foodstuffs where the country is a net importer –foodstuffs where the country is self-sufficient Reductions in supply –quotas –taking land out of use (e.g. set aside) Subsidies –effects on price and output –the incidence of a subsidy High minimum prices –foodstuffs where the country is a net importer –foodstuffs where the country is self-sufficient Reductions in supply –quotas –taking land out of use (e.g. set aside)

AGRICULTURE AND AGRICULTURAL POLICY Justification of the CAP –assured supplies of food –support for farm incomes –growth in agricultural productivity –stable agricultural prices –reasonable prices for consumers. Justification of the CAP –assured supplies of food –support for farm incomes –growth in agricultural productivity –stable agricultural prices –reasonable prices for consumers.

The cost of price and other market support for agriculture in the EU Source: Agriculture in the European Union, European Economy (European Commission)

AGRICULTURE AND AGRICULTURAL POLICY Criticisms of the CAP –agricultural surpluses static costs Criticisms of the CAP –agricultural surpluses static costs

P Q O PePe S D The cost to the taxpayer of high fixed prices

P Q O PePe PiPi S D QdQd QsQs a b Surplus The cost to the taxpayer of high fixed prices

P Q O PePe PiPi S D c b a d QdQd QsQs Surplus COST TO THE TAXPAYER COST TO THE TAXPAYER The cost to the taxpayer of high fixed prices

P Q O PePe S D PfPf PcPc Subsidy Q1Q1 Q2Q2 a The cost to the taxpayer of subsidies b

P Q O PePe PfPf S D a b PcPc COST TO THE TAXPAYER COST TO THE TAXPAYER Q1Q1 Q2Q2 The cost to the taxpayer of subsidies

Source: Agriculture in the European Union, European Economy (European Commission) Unequal support given to different agricultural products in the EU: 2001

AGRICULTURE AND AGRICULTURAL POLICY Criticisms of the CAP (cont.) –irrational relative prices –removes disciplines of markets –redistributive effects –effects on the environment –effects on the rest of the world effects of import levies effects of export subsidies Criticisms of the CAP (cont.) –irrational relative prices –removes disciplines of markets –redistributive effects –effects on the environment –effects on the rest of the world effects of import levies effects of export subsidies

AGRICULTURE AND AGRICULTURAL POLICY Reforming the CAP –price reductions –production quotas –set aside –diversification; low-intensity farming –income support –the MacSharry reforms effects on surpluses Reforming the CAP –price reductions –production quotas –set aside –diversification; low-intensity farming –income support –the MacSharry reforms effects on surpluses

c b a d P Q O P1P1 S1S1 D Original surplus Qs1Qs1 Qd1Qd1 FARMERS' ORIGINAL INCOME FARMERS' ORIGINAL INCOME Effect of the MacSharry reforms on cereal surpluses

P Q O P1P1 P2P2 S1S1 D c b a d Reduction in intervention price Qs1Qs1 Qd1Qd1 Effect of the MacSharry reforms on cereal surpluses

P Q O P1P1 P2P2 S1S1 D S2S2 c b a d Effect of Set-aside Qs1Qs1 Qd1Qd1 Effect of the MacSharry reforms on cereal surpluses

a b c P Q O P1P1 P2P2 S1S1 D S2S2 Qs2Qs2 Qs1Qs1 Qd2Qd2 Qd1Qd1 c b a d Reduced surplus FARMERS' REDUCED INCOME FARMERS' REDUCED INCOME Effect of the MacSharry reforms on cereal surpluses

AGRICULTURE AND AGRICULTURAL POLICY Reforming the CAP –price reductions –production quotas –set aside –diversification; low-intensity farming –income support –the MacSharry reforms effects on surpluses continuing problems Reforming the CAP –price reductions –production quotas –set aside –diversification; low-intensity farming –income support –the MacSharry reforms effects on surpluses continuing problems

AGRICULTURE AND AGRICULTURAL POLICY Reforming the CAP –price reductions –production quotas –set aside –diversification; low-intensity farming –income support –the MacSharry reforms effects on surpluses continuing problems –Agenda 2000 Reforming the CAP –price reductions –production quotas –set aside –diversification; low-intensity farming –income support –the MacSharry reforms effects on surpluses continuing problems –Agenda 2000

AGRICULTURE AND AGRICULTURAL POLICY Reforming the CAP –price reductions –production quotas –set aside –diversification; low-intensity farming –income support –the MacSharry reforms effects on surpluses continuing problems –Agenda 2000 the issue of EU enlargement Reforming the CAP –price reductions –production quotas –set aside –diversification; low-intensity farming –income support –the MacSharry reforms effects on surpluses continuing problems –Agenda 2000 the issue of EU enlargement

AGRICULTURE AND AGRICULTURAL POLICY Reforming the CAP –price reductions –production quotas –set aside –diversification; low-intensity farming –income support –the MacSharry reforms effects on surpluses continuing problems –Agenda 2000 the issue of EU enlargement proposals Reforming the CAP –price reductions –production quotas –set aside –diversification; low-intensity farming –income support –the MacSharry reforms effects on surpluses continuing problems –Agenda 2000 the issue of EU enlargement proposals

AGRICULTURE AND AGRICULTURAL POLICY Reforming the CAP –price reductions –production quotas –set aside –diversification; low-intensity farming –income support –the MacSharry reforms effects on surpluses continuing problems –Agenda 2000 the issue of EU enlargement proposals subsequent events Reforming the CAP –price reductions –production quotas –set aside –diversification; low-intensity farming –income support –the MacSharry reforms effects on surpluses continuing problems –Agenda 2000 the issue of EU enlargement proposals subsequent events

AGRICULTURE AND AGRICULTURAL POLICY Reforming the CAP –price reductions –production quotas –set aside –diversification; low-intensity farming –income support –the MacSharry reforms effects on surpluses continuing problems –Agenda 2000 the issue of EU enlargement proposals subsequent events –The 2002 reform proposals Reforming the CAP –price reductions –production quotas –set aside –diversification; low-intensity farming –income support –the MacSharry reforms effects on surpluses continuing problems –Agenda 2000 the issue of EU enlargement proposals subsequent events –The 2002 reform proposals

Government Intervention in the Market. Government Intervention in the Market The Control of Prices.

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Government Intervention in the Market. Government Intervention in the Market The Control of Prices.

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