The Ethical Economics
Study Center


MODULE 21: Government Policies - Price Supports / Political Economy

Textbook Reading:

Presentation Slides:


Additional Useful Information:

Price Supports
This Wiki page covers some very basic details about price supports.

The Logic of Collective Action
This Wiki page offers some details about Mancur Olson's 1965 book "The Logic of Collective Action. It also reviews a few of the major critiques of this work.

Was Mancur Olson Wrong
This article from the American Enterprise Institute provides some arguments to suggest that narrow special interests do not always win out in the political arena.



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