E. Hoffman et Gd. Libecap, THE FAILURE OF GOVERNMENT-SPONSORED CARTELS AND DEVELOPMENT OF FEDERAL FARM POLICY, Economic inquiry, 33(3), 1995, pp. 365-382
While economists recognize that private cartels are difficult to susta
in, they are too sanguine about the prospects for government-assisted
cartels. Although the state's coercive power would seem to make it an
effective enforcer of cartel agreements, the political costs of enforc
ement can be high if segments of the industry resist. The government's
solution lies in alternative strategies for raising prices. Examining
government efforts to organize an orange cartel in the 1930s, we find
that farmers' opposition to output cuts and quota assignments because
of their distributional effects forced a policy shift to purchases of
''excess stocks.''