POL201Y1 Lecture Notes - Lecture 7: Monopsony
Document Summary
Use monopsonies to control domestic prices: famers get less than what the product is on the international market to get a surplus in profit. Where does the surplus go: higher salary for the company running the monopsony, urban industrialization- manufacturing sector to process more product. At the expense of the agricultural sector. Governments have less control over food crops rather than farm crops because they can sell privately in a private market. Governments intervene in the market for manufactured items (secondary goods) State subsidizes inputs: seeds, fertilizer, equipment, loans, land and water, subsidies target large scale farmers because they are more productive, are available to small scale, but are not targeted because profitability is not high. Understand government behaviour: governments seek to maximize welfare. By generating development by industrialization, create a domestic manufacturing base, in order to create economic development. To secure higher levels of per capita income: governments respond to political demands.
