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This is such narrow minded logic. I know you're referencing the logic of concentrated benefits and diffuse costs. Saying for any individual consumer, paying an
by pzone 11y ago
This is such narrow minded logic. I know you're referencing the logic of concentrated benefits and diffuse costs. Saying for any individual consumer, paying an extra 5% for their maple syrup on average is a drop in the bucket, so if sales are $1 billion USD, we're basically letting the farmers extract $50 million from consumers, and that's not too much money, so who cares?
Well, I think $50 million is a lot of money, but that is seriously neglecting the other, bigger cost: the blocking of incentives to maximize production quantity and develop innovations.
If the cartel were dismantled, it's not just that prices would fall for existing consumers, but total supply curve would increase as well, since farmers would each have the incentive to produce as much as possible. Maybe it would turn from a $1 billion market to a $1.25 billion market. Whatever the particular number, it's bound to be a huge amount of value destroyed.
But the most violent sort destruction is that production quotas kill the incentive to innovate. Look at publications like this - there is very little incentive to experiment with new techniques like this in Quebec, because even if you could double your production, you wouldn't be allowed to sell anything past your quota. http://modernfarmer.com/2014/01/maple-syrup-revolution/ http://modernfarmer.com/2014/01/maple-syrup-revolution/ Destroying the incentive to innovate is murdering the future.