In this module we examine the effects of a government price support, which is a price floor with an obligation for the government to purchase the excess supply that will arise. The demonstrated effects show that such policies reduce economic efficiency and begs the question why governments may choose to implement policies that are welfare reducing in the aggregate. This is used as a springboard to introduce Mancur Olson's logic of collective action and to demonstrate the political economy effect of concentrated benefits that usually accrue to firms and dispersed losses that generally affect consumers and taxpayers.

Price Supports: Background and Effects - 13 minutes

Political Economy and The Logic of Collective Action - 59 minutes