Quote:
Originally Posted by Ironduke
Wouldn't game theory posit that if one farmer lowered his production, others would increase theirs to reap extra profit?
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No, that would not work. The government controls the price by setting it below the asking price on the market. This happens assuming the production cost has gone up for a variety of reasons, therefore, pushing the asking price up in the first place. The profit margin is razor thin, if at all. So by producing more, I don't make enough profit to justify the extra capital cost involved. If I make a profit at all.
I might as well cut back on my production to do other things like read a book or play with my kids.