price support

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Price support

Government intervention to set an artificially high price through the use of a price floor designed to aid producers.
Copyright © 2012, Campbell R. Harvey. All Rights Reserved.

Price Support

A government subsidy that keeps the price for a good or service higher than it otherwise would be. For example, the government may set a price support for milk by mandating that suppliers may not accept anything less than the stated price. Price supports exist to protect the livelihoods of suppliers who cannot afford a price war or anything approaching one; many economists oppose price supports because they claim they interfere with competition and the free market.
Farlex Financial Dictionary. © 2012 Farlex, Inc. All Rights Reserved
Price supportclick for a larger image
Fig. 151 Price support.

price support

a means of supporting the income of certain producers by administratively maintaining the PRICES of their products above market price. In many countries, price support systems are used specifically to assist the agricultural sector by ensuring an adequate level of total farm incomes. In Fig. 151, the EQUILIBRIUM MARKET PRICE is OA. If this price is considered too low to adequately remunerate farmers, the government will set a support price, say OB, at which it is prepared to buy up any unsold output. At the support price of OB, the government is then committed to acquiring the unsold output of CF at a total cost equal to the shaded area CFGH. The main problems with the price support method are that it penalizes consumers and results in wasteful overproduction. The price support method is used as the basis of the COMMON AGRICULTURAL POLICY of the European Union. Compare INCOME SUPPORT. See also AGRICULTURAL POLICY, BUFFER STOCK.
Collins Dictionary of Economics, 4th ed. © C. Pass, B. Lowes, L. Davies 2005
References in periodicals archive ?
He likened the Department of Agriculture's price support for rice, which was only P17 a kilo for palay but was granted an additional P3 incentive.
Most recently, the Chinese government strived to reduce its large stockpiles, especially for cotton and corn, and narrow the price gap between China's domestic and international markets by changing agricultural policies, particularly price support policies for cotton, soybeans, and corn.
The US had alleged that India was substantially under-reporting the value of its minimum price support (MPS) for cotton.
Government purchases of dairy products and price support costs were cut in half.
Federal Milk Marketing Orders regulate milk marketing across state lines but within explicitly defined regions and are designed to provide price support and market stability.
He pointed out that the cost of any price support would be offset by the savings made in flood protection, which the Department for Environment, food and Rural Affairs (Defra) has estimated could be as much as PS500m a year.
Specifically, we define the end of the price support period to be the first day that the fund trades more than $0.25 away from the IPO price.
How important was the dairy price support increase?
Ordinarily, dairy farmers who go out of business despite the availability of federal price supports would be regarded as unfortunate but ultimately necessary casualties of the impersonal workings of a relatively free market: Eventually, fewer producers would mean a lower volume of dairy products, resulting in higher prices for those who survive.
Tim Farron, Lib Dem MP for Westmorland and Lonsdale and chair of the All Party Parliamentary Committee on Hill Farming, is campaigning for the Government to provide much needed price support for farmers by purchasing much of the livestock that would otherwise have gone to expor t.
Claimlink Jewelry Replacement introduces Claimlink Secure, the industry's newest cutting-edge and user-friendly price support service.
Brorsen, 1995, "Valuing Target Price Support Programs with